Remember the recent caper whereby cities would condemn underwater mortgages — not the homes serving as security, but mortgages — for their depressed post-2008 crash value, and restructure the debt to bring the homes serving as security to a lower, more realistic level, thereby preventing homeowners from losing their homes by foreclosure? It all sort of petered out after protests by the financing folks who didn’t look kindly on the idea of having their mortgages taken for less than their nominal balance. You’d think that now, that depressed home prices are rising, that scheme would be doubly dead. But it turns out that this dead horse isn’t quite dead.
Reuters.com reports that a few small California towns are still studying it. They are El Monte, La Puente, San Joaquin, and over the state line, North Las Vegas (not to be confused with the real Las Vegas).
What the prospects are of succeeding this time, we cannot say, but we thought our readers may want to know that this scheme is not entirely dead — undead is more like it.
The Reuters.com story is Matthew Goldstein, Eminent Domain to Fix Troubled Mortgages Makes a California Comeback; click here.