Friday, June 21, 2013

Fed Talking About Using Eminent Domain to Take Homes

In a recent press release, the Federal Reserve is again talking about the possibility of using eminent domain to seize private homes that are "underwater" in their financing.  Being "underwater" means that you owe more than your house is worth i.e. you paid too much for your home or you used a really poor financing product from a bank (like a balloon payment) that is now impossible for you to pay.

Personal responsibility would dictate that people be responsible for their own bills.  Those on the left typically advocate for write-downs.  That is, having the bank absorb some of the money an individual owes on their home.  In today's market where loans are bought, sold, repackaged, and cut up into smaller piece to be sold piecemeal, that is virtually impossible and the Fed has acknowledged that.

Instead, they would like local and state governments to seize properties through eminent domain.  Their report on the subject can be read by clicking on the title link: "Paying Paul and Robbing No One: An Eminent Domain Solution for Underwater Mortgage Debt."

This proposal is a proposal for abuse of power.

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