Short Sale by Eminent Domain

Only in America. According to DS News the County of San Bernardino is considering seizing over encumbered properties under the eminent domain clause. Now we all learned eminent domain in school as when a city county state or federal government would seize land “for the greater good of the community” such as expanding a road or building a highway.

 

This new loose interpretation of “greater good” would allow the cities of Ontario and Fontana to seize the property of underwater homeowners, paying the servicer fair market value – which in most cases would be far less than what was owed and in essence wipe out the underlying debt. The city would then own the property and be able to sell it back to whomever they like – presumably the current homeowner.

Many argue this could set a dangerous precedent where investors would start refusing to buy loans on properties in those cities. Remember, most banks don’t keep the loans they make. Generally they sell them to the secondary market like Fannie Mae, Freddie Mac, retirement funds and other large scale investment firms. If investors won’t buy the loans, lenders won’t make the loan and the housing market freezes up.

It will be interesting to see how this all plays out and of course we will keep you updated.

To get a better idea of when your West Sacramento home will be worth what you owe, log in to www.shortsaleandloanmod.info for a free estimate or call me today for a free no obligation consultation or for the latest West Sacramento short sale information. Call me today and sleep better tonight; you’ll be glad you did