Pol Battles Eminent Domain — Again
July 23, 2013
Lawmakers are joining efforts to stop a controversial plan that would allow municipal governments to use eminent domain to seize underwater home owners’ mortgages. Firms such as Mortgage Resolution Partners have been trying to get more cities to adopt such a plan for the purpose of restructuring loans to help home owners.
But Rep. John Campbell, R-Calif., is again pushing a bill that would keep mortgage giants Fannie Mae and Freddie Mac from purchasing loans that are tied to properties in municipalities that have used eminent domain in this way. The bill would also prevent the Federal Housing Authority and the Department of Agriculture from insuring or making loans in those areas.
"Using eminent domain to seize mortgages is not only legally questionable, it represents a complete abrogation of private property rights,” Campbell says. “The federal government and the American taxpayer would be forced to bear all the risk in the event of a failure. Further, these schemes pose a critical threat to recovery of the housing sector, as lenders and investors that a sustainable housing finance system rely on would not have any faith in the durability of contracts."
Source: “Politicians file legislation to keep eminent domain grounded,” HousingWire (July 18, 2013)
Updated: September 24, 2020