Oh behalf of the ""Securities Industry and Financial Markets Association"":http://www.sifma.org/ (SIFMA), managing director Tim Cameron prepared remarks for a meeting in San Bernardino County to once again, express opposition towards the area's proposed use of eminent domain.[IMAGE]
San Bernardino County and the cities of Fontana and Ontario created a Joint Powers Authority to explore proposals to assist underwater homeowners. The proposal that has been at the center of debate in the housing industry is the proposed use eminent domain, which involves seizing underwater mortgages at fair market value. The mortgages would then be refinanced into new loans with more affordable terms.
While it is clear that San Bernardino County, like many other hard-hit areas across the U.S., are in need of a solution to address the problem of negative equity, the idea involving eminent domain has faced strong opposition.
In his prepared remarks, Cameron stated, ""we believe that the use of eminent domain would significantly harm mortgage finance markets, reduce access to credit for borrowers, and negatively impact average investors' portfolios.""
He also said ""the use of eminent domain raises serious legal and constitutional issues"" and added that ""short-term benefits to a small group of performing homeowners"" would not outweigh the ""long-term costs and liability risks of an eminent domain proposal.""
He further urged the JPA to explore the problem further, pointing out that the proposal ""targets a few thousand people who have good credit, are current on their mortgage payments, and most importantly, happen to have mortgages that have been sold in the private label securities market.""
He then went on to ask, ""Is this really where the JPA wants to focus its time and attention?""
While SIFMA's argument reflects the viewpoint of many who stand in opposition to the proposal, ""Reuters"":http://www.reuters.com/article/2012/07/27/us-mortgages-eminentdomain-idUSBRE86Q1GL20120727 reported California Lieutenant Governor Gavin Newsom asked SIFMA to ""cease making threats to the local officials of San Bernardino County"" in a statement that was first released to Reuters.
According to the Reuters article, Newsom stated, ""This may be an aggressive idea, but communities such as San Bernardino, Chicago and others have no choice in these desperate times.""
Earlier this week, a ""meeting was held in Chicago"":http://dsnews.comarticles/debate-for-eminent-domain-continues-to-spread-2012-08-14 in which the proposed use of eminent domain was also discussed.