Editor’s Note: Great article from Truth-Out. See the link below.
While I agree in principle with the idea of eminent domain, and like I said this morning it might be a good idea, I wonder if problems will be solved as efficiently as simply outright seizure of the mortgages because of illegal acts committed.
Efficiency comes into play and will inevitably raise its ugly head if and when eminent domain is first attempted. The city, county or State will have the same problem as the rest of us, including the courts. In eminent domain, the stakeholders must be paid fair market value of what is being seized. Fair market value might be a rather knotty problem as it converges with the issue of the corruption of title.
Who will the government pay? Who are the stakeholders? And if the mortgage is not a valid lien, then what is the value of an unsecured obligation owed to unknown parties some of whom were co-obligors on the total obligation when it was originated?
Yet the prospect of using eminent domain does sound rather appealing as a ground leveler and it puts the burden on the government to first suggest the value, and then switches the burden to the other side. The other side is going to be multiple stakeholders, none of whom can prove a loan receivable account. What then? Perhaps an escrow account, with a window of opportunity to make a claim. I would predict that in places that are home to governments not indebted to banks, there might not be any claimants.
The second hair-splitting problem is whether the government will seize the mortgage and the note or just the mortgage. There is wide divergence of opinion in my own head as to the outcome of that. So I would imagine the issue would be quite thorny in courts across the country.
Then there is the Judge that hears the case, whether he or she is appointed or elected and what type of voting demographics are present. In strong republican areas it is likely the Judge will be less than thrilled at giving the homeowner a bonus and throwing the bonus to parties presenting themselves illegally as stakeholders or creditors.
But the big benefit, as I have mentioned before is that in litigation over the eminent domain (a) the power to do it seems unquestionable and (b) the only issue is value and how the government will finance the purchase of the mortgages. In cases where institution is pitted against institution, reason has prevailed and the law has been applied even in Kansas.
We might yet see the end of this madness. It depends upon whether you will get activated and start writing letters and making calls and organizing others to do the same. Officials are not likely to take this action unless they believe there is strong public support behind it and they are convinced it is the right thing to do. We must continue to be vigilant about moral hazard, as it is quite likely that the banks will attempt to come in through the back door on the financing side of these purchases, screwing things up even further.
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