As reported by Fox Business host Stuart Verney, a California municipality has come up with a very creative definition of “eminent domain” to engage in a huge grab of “underwater” mortgages on privately-owned property, which Varney calls “a vast extension of government power.”
“The city of Richmond seizes privately-held mortgages — about 620 of them,” Varney explained.
These are all mortgages having a balance greater than the property’s fair market value.
The city then “cuts the amount that’s owed, and then resells those mortgages to other investors.”
The result is that while the homeowner wins, the entity owning the mortgage, generally a bank or savings & loan, is a big loser.
“Would you invest in the future in inner-city mortgages if this can happen to you,” he asks.
Gretchen Carlson noted that other cities are considering the same scheme, including, Newark, Seattle and North Las Vegas.
This is a dishonest, or at best, a very creative definition of the term “eminent domain,” which is generally the power of a state to take private property for public use.
Most commonly, eminent domain is used to acquire property for government buildings, public utilities, highways, and railroads.