In our recent Newsletter, http://www.hansonlawfirm.com/newsletter/ we talk about a creative way Counties are considering to clean up blighted areas in thier jurisdictions, and get owners in distress the loan modifications they need to keep the homes – thus leep the Counties from blight. Condemn the mortgage!
Some in the real estate industry don’t like the idea; others think it brilliant.
Marge Mellody wrote us back: “Read your article on condemning mortgages. Funny, you did not address that we the taxpayers are on the hook for Fannie and Freddie losses. We the taxpayers will be paying for that sweet deal the city gives the homowner who overextended themselves with a mortgage they can not pay.”
Our response: We the taxpayers are already on the hook for those mortgages. Fannie and Freddie will never revocer the lost value. Instead, the homes will be foreclosed upon, and a new investor will buy it at pennies on teh dollar. In the meantime, the Cities and Counties will be stuck with the carrying costs of a blighted area (been to Stockton lately?). So why not cut the middle man out, and resell or refinance the property, back to the current owner. That’s the net effect. Oh, but the losses the Banks will suffer! Of course, those are the same banks that made HUGE profits on those dumb ass loans in the first place. (I hope they saved their profits…) Oh, I forgot, the government already bailed those banks out, so they will suffer no losses after all. Just us taxpayers.