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Eminent Domain - Refi Based On Current Mkt Value


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#1 tsukiji

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Posted 11 August 2012 - 02:57 PM

I didn't read it in detail, but there is an article in the Bee about using eminent domain to seize houses that are underwater and then let the homeowner buy/finance it again at market value.

Something about this doesn't sit well with me. I'm very thankful that I'm employed. I don't have any current worries about making my mortgage payment. But I suffered through all the well meaning advice to buy my home with an ARM or some variant thereof. I payed a higher interest assuming that prices would come down. I suffered through paying higher interest while others were playing the no-down, ARM games.

I understand and sympathize with those that have lost their jobs and are having a hard time making ends meet. This is not about them. But others who remain employed and can make the mortgage payments, why should they get this type of benefit? I'm not sure I'm underwater (in the sense that my mkt value is still above my principal amount, albeit barely). But my mkt value is under my original purchase price.

Why wouldn't I get any benefit? Why couldn't I get my principal adjusted down at a lower interest rate just like these other people? They used the example of an owner who might have bought at $300k and it's now worth $200k -- they'd get a mortgage based on $200k. Why can't I get my mortgage adjusted by $100k too? Maybe I should just walk away from my house too. I'm getting a little tired of this craphole that is CA -- I'd like to move out. But I'm stuck here because I can't sell my house.

I'm thankful I'm not in dire straits. But I'm also a little pissed with the notion that you get penalized for trying to live smart.

Sorry for the rant. I just wish that there was a program that adjusts ALL mortgage principles down by 20% (or whatever), not just 'underwater' ones. Let the frickin banks suffer -- they caused all this.

#2 4thgenFolsomite

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Posted 11 August 2012 - 07:09 PM

I didn't read it in detail, but there is an article in the Bee about using eminent domain to seize houses that are underwater and then let the homeowner buy/finance it again at market value.

Something about this doesn't sit well with me. I'm very thankful that I'm employed. I don't have any current worries about making my mortgage payment. But I suffered through all the well meaning advice to buy my home with an ARM or some variant thereof. I payed a higher interest assuming that prices would come down. I suffered through paying higher interest while others were playing the no-down, ARM games.

I understand and sympathize with those that have lost their jobs and are having a hard time making ends meet. This is not about them. But others who remain employed and can make the mortgage payments, why should they get this type of benefit? I'm not sure I'm underwater (in the sense that my mkt value is still above my principal amount, albeit barely). But my mkt value is under my original purchase price.

Why wouldn't I get any benefit? Why couldn't I get my principal adjusted down at a lower interest rate just like these other people? They used the example of an owner who might have bought at $300k and it's now worth $200k -- they'd get a mortgage based on $200k. Why can't I get my mortgage adjusted by $100k too? Maybe I should just walk away from my house too. I'm getting a little tired of this craphole that is CA -- I'd like to move out. But I'm stuck here because I can't sell my house.

I'm thankful I'm not in dire straits. But I'm also a little pissed with the notion that you get penalized for trying to live smart.

Sorry for the rant. I just wish that there was a program that adjusts ALL mortgage principles down by 20% (or whatever), not just 'underwater' ones. Let the frickin banks suffer -- they caused all this.


I agree. I just can't believe what's happening in this country.
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#3 mac_convert

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Posted 11 August 2012 - 07:40 PM

HARP 2.0 is out for those who are underwater and have Fanny or Freddie loan. My loan is a Freddie, but I closed two months June and could only be eligible had I closed in April. I'll join the pity party too as I'm like Tsukiji in that I can afford my payment, but screwed I cannot refi with a lower interest rate and smaller loan!

I agree. I just can't believe what's happening in this country.



#4 4thgenFolsomite

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Posted 12 August 2012 - 06:56 AM

HARP 2.0 is out for those who are underwater and have Fanny or Freddie loan. My loan is a Freddie, but I closed two months June and could only be eligible had I closed in April. I'll join the pity party too as I'm like Tsukiji in that I can afford my payment, but screwed I cannot refi with a lower interest rate and smaller loan!


its the government using eminent domain to try to correct a uneven contract between two private entities that concerns me. that's a big stretch of government reach.
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#5 asbestoshills

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Posted 12 August 2012 - 07:49 AM

Instead of spending billions to "see" if banks would help those truly suffering, they stole the money and helped very few people. Then they were rewarded with more bailout money and threatened and still hardly helped anyone.
The whole thing could've been adjusted automatically by taking homes bought during the bubble and a certain percentage taken off the principal and the mortgage rate lowered to current market rates. This would have prevented foreclosures on millions of people. Now, it's a mish mash of political and social ills. Also, this new program wouldn't help Fannie/Freddy from what I understand, so who is it helping? Mostly rich millionares whose homes are worth millions and they are about to walk away from them. The rich get richer, the poor get poorer and the middle class pays for it all!
If you do this fairly, you have to include all homeowners, especially ones that got the Harp b/c most of them just had their mortgage extended with temporary rate cuts that inch up to higher than market rates.
Also, homeowners who can afford to pay, but are not able to refinance because of strict refi rules and are underwater should be able to use this program. I saw a short sale on my street yesterday close for $110,000 less than my house is worth, makes me sick. We will never make money off our home, esp b/c there are going to be thousands of brand new homes going to be built on 50.
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#6 4thgenFolsomite

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Posted 12 August 2012 - 09:28 AM

We will never make money off our home, esp b/c there are going to be thousands of brand new homes going to be built on 50.


not necessarily. I think south of 50 is going to be more like Elk Grove or the pocket area. there may be new homes, but I suspect they won't be large upscale houses. There won't be any kind of competing mall out there either, so more strip commercial (grocery store with a scattering of smaller retail and drive-through). So what is north of 50 wll be closer to Lake Natoma and Folsom Lake and the malls and Three Stages and old town. I think it will have more of a community feel. Your home value may be just fine.

I love that open space so much and that oak forest and the rolling hills that I hope it is many many years until dirt is moved.
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#7 Redone

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Posted 12 August 2012 - 09:51 AM

We will never make money off our home, esp b/c there are going to be thousands of brand new homes going to be built on 50.


Some would say the cost of the new home will drive your home value up. I guess you'll see in a few years.

#8 asbestoshills

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Posted 12 August 2012 - 03:27 PM

I HIGHLY doubt it. The new cookie cutter homes will sell like hotcakes b/c of the low interest rates and the area isn't as desirable as Folsom. However, not sure how desirable Folsom will be with a huge new set of trac homes. It's going to be like Elk Grove, you can already see how our parks are starting to not even be kept up etc.
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#9 MikeinFolsom

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Posted 12 August 2012 - 04:43 PM

I can see the reason local governments would jump to do this. It keeps owners in their homes, keeps them paying property taxes, keeps them in the community. If it lowers their mortgages, one would figure they would take that money and pump it into the local economy? I can honestly say from my stand point that if my mortgage was lowered by this then yes, the money would go towards more entertainment and family activities in the local area.

The down side of this is it almost starts to stink of Socialism? The local governments will decide how much your house is worth? But all in all, if the house payment can come down, I'm good with it. Everything else is going down, like my take home pay. So why not?

#10 tsukiji

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Posted 12 August 2012 - 06:15 PM

My point is that if they do it, they should do it across all mortgages and not selectively based on some arbitrary criteria. My house went down in price just like theirs so why am I not entitled to some relief?

#11 Redone

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Posted 13 August 2012 - 07:23 AM

A few issues with this.

#1-- They want to take performing loans and do this just because they're upside down. No hardship and still paying your mortgage.
#2-- Secondly, money is not free and comes from somewhere. However, just because you pay your payment to "Bank XYZ" doesn't mean they own it. They can be collecting the payment for your own pension or retirement fund. Stealing from someone's retirement fund to pay for someone elses upside down home is not a net gain to society.
#3-- Lenders won't lend in these areas because there is too much risk of not getting paid back due to eminant domain issue.

Ultimately this is not about keeping people in their home but solely about property tax revenue for these local governments. Elk Grove went up 10% in the past 6 months and their property tax will be rising. We shouldn't jeopardize our freedom for a couple of down years property tax revenue.

#12 MikeinFolsom

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Posted 13 August 2012 - 07:43 PM

One reason I can think they won't help people who do have equity in their homes and are paying on time is those people have actual $$$ to lose if they walk from their home. Someone who is under water on their loan has a lot less of an obligation to stay. From a pure business standpoint, it never makes sense to pay for something that isn't worth the money you're paying for it. Purchasing a new vehicle from a dealer's lot is one of the worst business deals you can enter into, but it is such a necessity. The 'experts' will always tell you to purchase a 2 year old vehicle and then negotiate into the purchase price an extended warranty. Why? The depreciation has already taken hold.

What I always hear is the 'moral obligation' one should hold dearly when dealing with a mortgage. Yet when it comes to business, if it costs you $100 a month to run your business but you're only bringing in $85 in revenue, would you keep running said business?

#13 asbestoshills

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Posted 14 August 2012 - 07:31 AM

There should be a software created and all mortgage bought between so and so date get priority to lower the principal and then the remaining homeowners can have their mortgage lowered to current market rates if needed. Basically, whomever wants their mortgage submitted for prinicpal reduction and interest reduction can use the software to see if they qualify. THIS bs was suppose to be done years ago with HAMP, but it was so crooked that it barely helped anyone. This new program shouldn't be based on income, payments or anything other than the market value of the home. If it is underwater by $100,000 and has an interest rate of 6%, lower the home to market value and the interest rate on the remaining loan. WHY IS THIS SO hard to implement? It actually saves the banks in tons of man hours b/c it's fair and they don't have to make any decisions based on submitted income etc.
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#14 Robert Giacometti

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Posted 14 August 2012 - 01:14 PM

A few issues with this.

#1-- They want to take performing loans and do this just because they're upside down. No hardship and still paying your mortgage.
#2-- Secondly, money is not free and comes from somewhere. However, just because you pay your payment to "Bank XYZ" doesn't mean they own it. They can be collecting the payment for your own pension or retirement fund. Stealing from someone's retirement fund to pay for someone elses upside down home is not a net gain to society.
#3-- Lenders won't lend in these areas because there is too much risk of not getting paid back due to eminant domain issue.

Ultimately this is not about keeping people in their home but solely about property tax revenue for these local governments. Elk Grove went up 10% in the past 6 months and their property tax will be rising. We shouldn't jeopardize our freedom for a couple of down years property tax revenue.


I might be missing something, but wouldn't property taxe revenues actually decline under this program?

If in the example they gave, the $300,000 house was now worth $200,000, but they were going to E.D. it for $160,000, why wouldn't the property tax be based on the $160,000?

How would anyone one of us like to be the neighbor who isn't getting this deal from the Government? Can you imagine the politics involved on who gets this deal ad who doesn't?

I'm only asking for discussion purposes, I recognize your not the author of this idea.

IMO, this is the scariest idea I've ever heard of! If cities can do this, then why can't they E.D. busineses that aren't producing up their potential?




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