A California-based mortgage services firm has a novel idea to curb the amount of underwater mortgages. The concept is to use the power of eminent domain, where local government authorities would “condemn” the underwater mortgages and force a refinance.

Super controversial idea

Among the powers of the federal, state and local governments in the U.S., and certainly one of the single most questionable, is the power of “eminent domain.” Eminent domain is the right of a government to seize land from its owner for the “public good,” as not doing this would be considered detrimental to public welfare. Home or land owners whose property is thus seized must be compensated for the loss of their property.

There are a lot of issues associated with eminent domain seizures. Even though they are for the common good, such as for highway extensions, people are usually not given what the land is worth from the government. For instance, one landowner in the city of Hoboken was given $2.3 million for an acre of land worth $10 million to make a park, according to New Jersey.com. A lot of people think this is the worst type of abuse of power.

Try it like this

Reuters explained that one good concept came from California-based company Mortgage Resolution Partners. The idea would help get rid of the mortgage loans people have by using eminent domain. Normally, the home is recognized as “condemned” when this takes place, but MRP wants it to happen with the loans instead.

Millions of homeowners are underwater. CoreLogic estimates 22 percent of the nation’s home loans are underwater; Zillow, according to CNN, estimates 31.4 percent of the country’s houses are in negative equity. MRP’s idea, according to Reuters, is to get private investors to invest the funds needed to seize the loan and pay the bank that owns seized properties a fair industry price, which would be lower than the purchase price, for the deeds to said properties. The loans would then be restructured by MRP for a fee and sold to brand new investors, lowering payments for the mortgage borrower.

The action would be funded by investors, which means the only government involvement in California would be to turn in the eminent domain paperwork. There would be no taxpayer dollars used.

Not the law yet

Even though the bill has been well-received in some areas, it has already been turned down by the Hesperia city council, according to the Hesperia Star. This is in spite of the fact that 50 percent of homeowners in the city have underwater home loans. Since California has been hurt a lot by the decreased home values, many people in California are really excited about the plan. MRP has talked to a lot of local government authorities about it already. Remember, it is just a proposal at this time.

Despite the belief that a ton of people are underwater, a ton of them are still paying on their payments, according to CNN. The Zillow survey showed that 90 percent of underwater home owners are still making payments regularly. It is extremely dangerous for a homeowner to own more than the home is worth because they could end up in foreclosure.

Resource for this article: why possibly not carry out your benefit this will analyze https://personalmoneynetwork.com/military-loans?