CA city to use 'eminent domain' to seize homes that are under water

[green73]

RICHMOND, Calif (Reuters) - Richmond, California's leaders approved on Wednesday morning a plan for the city to become the first in the nation to acquire mortgages with negative equity in a bid to keep local residents in their homes.

The power of 'eminent domain' allows governments to seize private property for a public purpose. Critics say the plan threatens the market for private-label mortgage-backed securities.

Richmond's city council voted 4 to 3 for Mayor Gayle McLaughlin's proposal for city staff to work more closely with Mortgage Resolution Partners to put the plan crafted by the investor group for the city to work.

Richmond can now invoke eminent domain if trusts for more than 620 delinquent and performing "underwater" mortgages reject offers made by the city to buy the loans at deep discount pegged to their properties' current appraised prices to refinance them and reduce their principal.

cont
http://ca.news.yahoo.com/california-city-approves-eminent-domain-negative-equity-mortgages-090351924.html

[tod evans]

Isn't Cal. broke?

What kind of financial wizardry is afoot?

[fisharmor]

I don't understand what the immediate problem is.
Are the mortgage holders not getting an option in whether to sell?

Of course I object on the grounds that the state has no business doing any of this. But that's not what upsets people - there has to be someone getting screwed out of money for people to object to anything anymore..... so who is it?

[jkr]

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[green73]

I don't understand what the immediate problem is.
Are the mortgage holders not getting an option in whether to sell?

Of course I object on the grounds that the state has no business doing any of this. But that's not what upsets people - there has to be someone getting screwed out of money for people to object to anything anymore..... so who is it?

The mortgage holders.

[thoughtomator]

The mortgage holders.

Depending on who those mortgage holders are, it may be a well-deserved comeuppance. Bubble debt is odious.

[ClydeCoulter]

Depending on who those mortgage holders are, it may be a well-deserved comeuppance. Bubble debt is odious.

Yeah, there may be some light in this. Seems the state level need not be involved, local level could make moves that cost the people nothing but "lifts a finger to remove conflated burdens".

But don't worry, the "system" has it's proponents for the proper punishment of anyone that would attempt to question the "system" (regardless of it's merits): "Responding to the plan, the Federal Housing Finance Agency recently said it would press Fannie Mae and Freddie Mac to limit or cease its business where such proposals get approved, effectively closing off most mortgage financing there."

[kcchiefs6465]

I don't understand what the immediate problem is.
Are the mortgage holders not getting an option in whether to sell?

Of course I object on the grounds that the state has no business doing any of this. But that's not what upsets people - there has to be someone getting screwed out of money for people to object to anything anymore..... so who is it?
"Fair market value" is a joke of a notion. Especially considering you are obligated to sell at what they claim that to be.

Childhood memories, you like the area, etc. are reasons a fair value is subjective. The Fifth Amendment was never intended to make someone obligated to sell their property simply because the government wants it. First it was for public benefit; roads and highways, that sort of thing. That's bad enough when people are forced to leave their homes or sell their property for under what they value their land. After Kelo v. City of New London it was ruled that public benefit can be extended to any economical benefit towards the government. Have a piece of property that you grow your corn on? Well say a business wants that land and would subsequently pay more taxes by putting the land to another use (even a new parking lot for their store). The government has claimed and has exercised the authority to take that land under eminent domain and award it to private companies. Aside from property taxes and the fact that you don't own shit, that ruling reaffirmed that you really don't own shit. If the government wants it, they'll take it. Simply by saying they'll get more tax revenue from the people they decide to give it to and that that would benefit the public. Looking at houses or property in the area and seeing what they sold for means nothing. That is not your property and a fair value is subjective. No one should be forced out of their home under forced transactions they do not agree to.

[greyseal]

The city of Richmond doesn’t have to pay anything. The only authority for non-judicial foreclosure, resides with the secretary of the Housing Authority, for government owned property.
Admittedly, due to the nature of the mortgage contract, the bank did have a lien on the real property, however to take naked possession without a court order, is not supported in law, or decisions of the courts, thereby, the banks have lost the lien, and have no claim to the property.
Case in point, In the case of United States v. Security Tr. & Savings Bank, 340 U.S. 47, 50, 71 S.Ct. 111, 113, 95 L.Ed. 53, 56, it was held that;"* * * if the state court itself describes the lien as inchoate, this classification is `practically conclusive.' (Citing.) The Supreme Court of California has so described its attachment lien in the case of Puissegur v. Yarbrough, 29 Cal.2d 409, 412, 175 P.2d 830, 831, by stating that, `The attaching creditor obtains only a potential right or a contingent lien * * *.' Examination of the California statute shows that the above is an apt description. The attachment lien gives the attachment creditor no right to proceed against the property unless he gets a judgment within three years or within such extension as the statute provides. Numerous contingencies might arise that would prevent the attachment lien from ever becoming perfected by a judgment awarded and recorded. Thus the attachment lien is contingent or inchoate — merely a lis pendens notice that a right to perfect a lien exists. Inchoate. Imperfect; partial; unfinished; begun, but not completed; as a contract not executed by all the parties. State ex rel. McCubbin v. McMillian, Mo.App., 349 S.W.2d 453, 462.
The lawful procedure for foreclosure of real property is addressed in the Code of Civil procedure section 726; (pertinent section reproduced below) it has to be judicially foreclosed.
§ 726. Form of action; procedure
Form of action; judgment.
There can be but one form of action for the recovery of any debt, or the enforcement of any right secured by mortgage upon real property, which action must be in accordance with the provisions of this chapter. In such action the court may, by its judgment, direct the sale of the encumbered property (or so much thereof as may be necessary), and the application of the proceeds of the sale to the payment of the costs of court, ……

Civil Code section 2924, is the code the banks use to non-judicially foreclose on real property in California , however its Chattel Mortgages.
1872 Civil Code, publisher, Bancroft Whitney Co, Page 1028
INDEX
CHATTEL MORTGAGE
* Pledge, transfer of interest in personalty "as security, when is, § 2924.

Twenty three years later the Supreme Court of California, addressed the definition of the property in said 2924, and the classification.
[No. 19385. In Bank.—January 5, 1895.]
JOHN D. WORKS ET AL., RESPONDENTS, v. GEORGE
A. MERRITT, APPELLANT. 105 CAL. 467
ID.—MORTGAGE OF PERSONAL PROPERTY—CONSTRUCTION OF CODE.—
Under section 2924 of •the Civil Code a mortgage may be made by a transfer of an interest in any personal property, other than in trust, made only as security for the performance of another act, and the power to mortgage personal property, without a transfer of pos¬session, is not confined or limited to the articles enumerated in sec-. 2955 of the Civil Code. (Underlining added)

The high court also addressed the classification of the mortgage, as it stated;
ID.-FORMALITIES OF CHATTEL MORTGAGE
The provision of section 2957 of the Civil Code, declaring that a mortgage of personal property is void as against creditors of the mortgagor and subsequent pur¬chasers and encumbrances in good faith, unless the formalities therein prescribed are complied with, are not limited to chattel mortgages upon property enumerated in section 2955, but apply generally to any mortgage of personal property ; and any such mortgage is good as between the parties and as against subsequent purchasers and encumbrances with notice, though not executed with the formalities required for a chattel mortgage.
This California Supreme Court decision has never been reversed, and confirmed by the Arizona Supreme Court in 1935.

[69360]

I don't understand what the immediate problem is.
Are the mortgage holders not getting an option in whether to sell?

Of course I object on the grounds that the state has no business doing any of this. But that's not what upsets people - there has to be someone getting screwed out of money for people to object to anything anymore..... so who is it?

The mortgage holders.

It sets a horrible precedent that's the real problem. It undermines the whole capitalist system if the state can just take a corporation or individual's investment over and become the mortgage holder. If the state gets away with this, what stops them from taking all property over?