@NYTimes reports on the city of Richmond, CA using Eminent Domain to buy potentially defaulted loans from banks to PROTECT home owners. YES.

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From the article:

The city is offering to buy the loans at what it considers the fair market value. In a hypothetical example, a home mortgaged for $400,000 is now worth $200,000. The city plans to buy the loan for $160,000, or about 80 percent of the value of the home, a discount that factors in the risk of default.

Then, the city would write down the debt to $190,000 and allow the homeowner to refinance at the new amount, probably through a government program. The $30,000 difference goes to the city, the investors who put up the money to buy the loan, closing costs and M.R.P. The homeowner would go from owing twice what the home is worth to having $10,000 in equity.

This is awesome. I love this because the banks are getting shafted as much as home buyers usually are. But this makes sense for the city of Richmond to do since, if they don’t, they’ll lose a huge amount of productive citizens.

This is one of the few good ways Eminent Domain should be used. Read the article here: www.nytimes.com/2013/07/30/business/in-a-shift-eminent-domain-saves-homes.html

via thepete.com http://thepete.com/nytimes-reports-on-the-city-of-richmond-ca-using-eminent-domain-to-buy-potentially-defaulted-loans-from-banks-to-protect-home-owners-yes/