{"id":828,"date":"2012-08-15T07:31:48","date_gmt":"2012-08-15T11:31:48","guid":{"rendered":"http:\/\/dankrell.com\/blog\/?p=828"},"modified":"2012-08-20T19:01:48","modified_gmt":"2012-08-20T23:01:48","slug":"a-new-wrinkle-for-eminent-domain","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2012\/08\/15\/a-new-wrinkle-for-eminent-domain\/","title":{"rendered":"A new wrinkle for eminent domain"},"content":{"rendered":"

Dan Krell, Realtor\u00ae
\nDanKrell.com<\/a>
\n\u00a9 2012<\/h3>\n

\"eminent<\/a>When the housing market began its decent in 2007, foreclosures seemed to occur with the frequency not seen since the S&L crisis of the late 1980\u2019s. Since then, negotiating a lower mortgage payment by modifying the mortgage interest rate and\/or reducing the principal continues to be difficult for many home owners.<\/h1>\n

One of the reasons why modifying a mortgage can be difficult is because of the complicated structure of the Real Estate Mortgage Investment Conduits (REMIC). A REMIC, is a financial instrument that may have stimulated the wide use of \u201c100% financing\u201d and other high risk mortgages through securitization of mortgages on the secondary market. Although a highly complex structure, a very basic explanation is that the REMIC purchases large pools of mortgages and acts as the trustee for those who own the bonds to which the loans are securitized (mortgage backed securities). Bond holders could be individuals or corporations that may also sell ownership to the bonds as well (e.g., funds, annuities, pension plans). Mortgage modifications in the REMIC environment can be legally complex. Additionally, the inherent complex structure of the REMIC as well as its fiduciary responsibility to its bond holders, makes decisions move at a snail\u2019s pace.<\/p>\n

In an effort to assist home owners in their local communities, a few municipalities (most notably San Bernardino County) have considered restructuring mortgages via eminent domain. Eminent domain is the power that government exercises to take private property for public use and pay the owner a \u201cjust compensation.\u201d And although eminent domain cases typically involve real property (e.g., land), it may also involve other types of personal property.<\/h3>\n

Considering that eminent domain is often a contentious topic, you might imagine that there might be some resistance to the condemnation of mortgages by municipalities. The Federal Housing Finance Agency (the FHFA oversees Fannie Mae and Freddie Mac) entered a note in the Federal Register on August 9th (\u201cUse of Eminent Domain To Restructure Performing Loans\u201d)<\/a>. The note listed concerns for such practice of eminent domain, among which is a concern that tax payers could ultimately bear the losses incurred from restructuring mortgages through eminent domain. As a result, the FHFA may take action to \u201cavoid a risk to safe and sound operations and to avoid taxpayer expense.\u201d<\/p>\n

\"eminent<\/a>The Wall Street Journal reported on August 8th (\u201cNew Roadblock for Eminent Domain Bid: Housing Regulator\u201d<\/em>; by Al Yoon<\/a>) that banking and other related groups are concerned that \u201cstripping loans from investors would create unnecessary losses and reduce the availability of credit.\u201d And, \u201c\u2026 the Securities Industry and Financial Markets Association, or Sifma, has proposed prohibiting loans originated in areas using eminent domain from a key part of the $5 trillion mortgage-backed securities market that is a backbone for U.S. housing finance.”<\/p>\n

An article by Rep Brad Miller published in the American Banker on July 11th (\u201cNo Wonder Eminent Domain Mortgage Seizures Scare Wall Street<\/a>\u201d<\/em>) discussed the impact of eminent domain of mortgages on Wall Street, specifically the four largest banks. Congressman Miller pointed out that there is a cost to lenders holding second mortgages when mortgages are restructured. In particular, the four largest banks, which \u201chold $363 billion in second liens, very commonly on the same property as first mortgages they service.\u201d<\/p>\n

Regardless of the outcome, there is sure to be plenty of posturing; the result may add a new wrinkle in the eminent domain debate.<\/p>\n

\"Protected<\/a><\/p>\n

More news and articles on \u201cthe Blog\u201d<\/a>
\nThis article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 13 , 2012. Using this article without permission is a violation of copyright laws. Copyright \u00a9 2012 Dan Krell.<\/p>\n

Z89E4WPH539G<\/p>\n","protected":false},"excerpt":{"rendered":"

Dan Krell, Realtor\u00ae DanKrell.com \u00a9 2012 When the housing market began its decent in 2007, foreclosures seemed to occur with the frequency not seen since the S&L crisis of the late 1980\u2019s. Since then, negotiating a lower mortgage payment by modifying the mortgage interest rate and\/or reducing the principal continues to be difficult for many … <\/p>\n

Continue reading “A new wrinkle for eminent domain”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[321,166,288,353,222,13],"tags":[899,881,590,890,797],"class_list":["post-828","post","type-post","status-publish","format-standard","hentry","category-eminent-domain","category-fhfa","category-housing-market","category-mortgage-backed-securites","category-mortgage-modification","category-real-estate","tag-eminent-domain","tag-fhfa","tag-mortgage-backed-securities","tag-mortgage-modification","tag-real-estate"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p1VZLf-dm","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/828","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/comments?post=828"}],"version-history":[{"count":5,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/828\/revisions"}],"predecessor-version":[{"id":835,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/828\/revisions\/835"}],"wp:attachment":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/media?parent=828"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/categories?post=828"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/tags?post=828"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}