Mortgage Resolution Partners (MRP), has a unique plan to “fix” the housing market. Eminent Domain!
Eminent domain is “the power of a governmental entity (federal, state, county or city government, school district, hospital district or other agencies) to take private real estate for public use.” The 5th amendment to the constitution makes it legal. The 14th amendment requires that property owners be justly compensated for their confiscated property.
MRP wants to facilitate the process for local governments to seize underwater home loans from lien holders (banks and trusts and other entities that own the mortgages). Under MRP’s plan, the city would pay the mortgage holder “fair market value” for the loan and then refinance with the homeowner at a price that is more in line with the home’s “true market value”. Sounds appealing.
LOCAL GOVERNMENTS WOULD BE FORCEFULLY TAKING OWNERSHIP OF PROPERTIES THAT ARE NOT THEIRS! They would “pay” the loan holders an amount MUCH LESS THAN THE CONTRACTUALLY AGREED UPON VALUE of the mortgage. AND they would be settling with the homeowners at a price much lower than the agreed upon contractual value, thus 1) ARTIFICIALLY DEFLATING THE VALUE OF HOMES in the local area, and 2) perpetuating the current attitude that “PEOPLE NO LONGER HAVE TO UPHOLD THEIR CONTRACTUAL OBLIGATIONS; INSTEAD THE GOVERNMENT WILL BAIL US OUT.”
I’ve read a few news articles pertaining to MRP’s plan, and I’ve taken a look at their web site. Although the Whitehouse is currently skeptical about eminent domain as a cure for the mortgage and housing crisis, Steven Gluckstern, Chairman of MRP, helped raise between $100,000 and $500,000 for President Obama in 2008, and sources indicate that he is currently raising money for Obama’s current campaign.
Mark my words, if 1) MRP has its way with eminent domain starting in a few municipalities in California and if 2) Barack Obama wins the upcoming election, the federal government will get in on the action!
© Dr. Phil Bryant
Dr. Bryant is an Assistant Professor of Management at Columbus State University and co-author of Managing Employee Turnover.