New look at plan to use eminent domain to seize troubled mortgages
“The county and the cities last year formed the Joint Powers Authority to consider the eminent domain idea. On Thursday, members of the authority will consider seeking proposals from outside contractors to manage a homeowner-rescue program. Chaired by county Chief Executive Gregory C. Devereaux, the authority has the ability to enact a program without additional city and county approvals.
Ever since the authority’s first meeting last July, advocates of the mortgage and investment industries have called the plan a government overreach that would nullify valid contracts and hurt the local housing market. The result would be protracted litigation, a surge in mortgage rates and a tightened market for borrowers with less-than-perfect credit, critics have said.
“Any proposal involving eminent domain will do more harm than good to the markets,” said Tim Cameron, a managing director for the powerful Securities Industry and Financial Markets Assn., or SIFMA. “Put yourself in the position of an investor investing in a product: That is an additional risk, an unquantifiable risk … and that’s the type of thing that causes premiums to go up.”
In reality, that process would be hard to pull off and probably would face legal challenges, Mortgage Resolution Partners acknowledges. Gluckstern, in an interview Tuesday, said his group would cover any legal costs and would be willing to press the case to the highest court that would take it up.”
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Lazo, Alejandro. LA Times 23 January 2013.