Truth Frequency Radio
Aug 18, 2013

Russia Today

Published time: August 15, 2013 02:58
Edited time: August 15, 2013 22:54

A city in California has become ground zero in a battle with mortgage lenders and now the federal government in its push to implement a radical new plan to assist homeowners who cannot meet the terms of their loans.

The Bay Area city of Richmond is the first to push for the use of eminent domain in a plan that would see mortgages in repayment delinquency seized from lenders and investors, or rather sold at a deep discount, by the city, and then refinanced on behalf of borrowers with more affordable terms.

The US Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae and Freddie Mac, has now said that it will move to halt the use of eminent domain by cities to seize underwater mortgages from lenders.

Richmond, a working-class city of 106,000 people in the East Bay, has a large population of both blacks and Latinos, and was hard hit by the US housing crisis, with homeownership rates considerably below the national average according to the LA Times.

Richmond’s plan is unusual since eminent domain is usually only invoked to obtain land needed for public projects such as highways, or at other times to take possession of run down and abandoned structures. The concept itself is deeply ingrained in both the US Constitution and that of state constitutions.

The federal housing agency indicated on Thursday that it has no intention of allowing the city to go forward with its mortgage plan, and will instruct Fannie and Freddie to “limit, restrict or cease business activities” in any jurisdiction using eminent domain to seize mortgages according to the Los Angeles Times.

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