Bill Reintroduced to Protect Americans From 'Abusive Government Takings'

July 22, 2013
MortgageOrb.com 
mortgage lending news

A measure initially proposed last fall to block U.S. municipalities from using eminent domain to prevent foreclosure has been reintroduced by Rep. John Campbell (R-Calif.). Resuscitation of the Defending American Taxpayers From Abusive Government Takings Act comes as a number of U.S. cities and towns consider buying loans from securitized mortgage pools, with investors receiving current market value for the underlying properties. The loans, meanwhile, would be restructured to eliminate negative equity and then resold on the secondary market. Campbell argues that such schemes do more harm than good, exposing savers and retirees to significant losses on homes purchased through their pension funds and 401(k) accounts. "Using eminent domain to seize mortgages is not only legally questionable," he insists, "it represents a complete abrogation of private property rights." The Mortgage Bankers Association (MBA) and other groups, Wall Street investment firms, and the Federal Housing Finance Agency also take issue with eminent domain as a foreclosure-prevention tool. MBA President and CEO David Stevens warns that it would produce "tighter, more expensive credit for potential home buyers and those looking to refinance, driving down home values and threatening local economic recovery." Campbell hopes to avoid this kind of fallout by barring Fannie Mae and Freddie Mac from buying any home loan secured through eminent domain within the previous 120 months. His bill also would stop the HUD secretary from insuring or guaranteeing any loans in counties where eminent domain laws are in place.
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