Banksters’ Useful Idiots: Brockton Considers Dubious Eminent Domain Strategy, Tainting More Legitimate
“Regular readers may recall about a dozen municipalities, with San Bernardino getting the most press by being one of the earliest to consider it, were looking into using municipal powers of eminent domain to deal with the foreclosure mess. The particular scheme they were considering was beaten back, and as we’ll discuss soon, for very good reasons.
Let me stress that eminent domain could be a very powerful, positive tool to deal with a whole series of problems: foreclosed properties the banks are letting fall apart (accompanying fines would also help), condemning mortgages in the “zombie title” status, where banks have walked away after scaring homeowners into leaving via foreclosure actions that were never completed, or homes just entering foreclosure. Hedge funds would, for instance, be very interested in providing funds to acquire and restructure mortgages of borrowers; this would be a way to cut the principal mod Gordian knot (as in servicers find all sorts of reasons not to do them because it is far more profitable for them to foreclose.
But instead, zombie like, a hare-brained version of this idea refused to die. And keeping it around will encourage both securitization originators and investors to oppose any use of eminent domain, even ones that would be in their interest, out of slippery slope concerns that it will legitimate abusive applications as well.”
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Smith, Yves. naked capitalism blog 16 January 2013