Banks to Richmond: How about you eat a crispy bag of dicks? Eminent domain? EMINENT FUCKING DOMAIN?!? Yeah, yeah, emotional rhetoric and sympathetic imagery.
Oh my. Big businesses that are AGAINST Eminent Domain when it's not going to make them any money. Color me shocked.
Most cities that have looked at eminent domain as a way to deal with banks have only done so with forecloosed properties that are not maintained. Cities can and do seize such blighted properties. This seems quite a bit more questionable, because Richmond is essentially saying it doesn't like the terms or a contract freely entered by independent third parties. Can't get behind this idea. People who can't afford their payment should sell or default.
It won't lead anywhere because any competent court would demolish the city. There is no legal justification for this that the city and this company can cook up and pass muster.
There was a city in Virginia which had the same plan which they eventually backed down on but just the threat of doing it resulted in the banks agreeing to principle write downs, resetting of interest rates to low fixed (instead of sky high variable), and a moratorium on foreclosures until the resets and principle write downs process was completed. Personally, I'd say those are very real concrete gains for a community and, sure, the banks did it because the compromise write down amount was far smaller than what the city originally wanted but why shouldn't a city play this game? Clearly just threatening to do it will get huge savings for citizens so there is clearly something to gain.
Meh. The banks took advantage of loopholes in the law to act in a predatory manner and fuck their customers. For some reason, I can't feel all that bad when another entity uses other loopholes to fuck them back.
Actually, I see nothing wrong with the plan. The entire question is the fact that these houses are 'underwater' - which is why the plan is ethical. They are forcing the mortgage holders to sell at current market value. The fact that the mortgages were written at more than twice that is irrelevant. They are being paid what the value of the house is currently worth. The city then repackages the mortgage at current value, and sells to the home owner. This has been championed by Robert Hockett at Cornell for several years now. He wrote a paper for the New York Fed here: http://www.newyorkfed.org/research/current_issues/ci19-5.pdf Now will this work? FUCK NO. The city of Richmond doesn't have anywhere near the legal clout to get this past the Wall Street financiers that own the country. They'll get destroyed in court. And the FHFA just came out and threatened any city that attempts this that they will stop providing Freddie and Fannie support to new mortgages in the City. In effect, they are blackmailing a legal tactic by the cities to help their citizens. Richmond seems to have taken it too far, by attempting to do so on a majority of properties that are actually current on their payments and attempting to do so on houses outside the city limits in their suburban areas. But on the other side, because not a single traditional mortgage holder is involved, instead being complex financial entities that have no incentive to down write mortgages when a traditional holder often would, there's actually a case to be made that in the long term this is going to save those financial institutions from their own malfeasance. Eminent domain itself is a big issue - Bush 43 entered an executive order that the Feds can only take land for public use, not private development, but that's not applicable in this case. Not sure where the state of California stands on that - if it has a similar statute then this is dead on arrival. But that doesn't mean it couldn't be applied elsewhere. And come to think of it you could make the argument that avoiding mass foreclosures is in the public interest - as foreclosures lower land values and that his a ripple effect throughout communities as we've often seen since the sociopaths on Wall Street decided to fuck the world for a quick profit because of their immunity to prosecution thanks to deregulation. There's been one prosecution for the financial crisis, and still no jail time served. The S&L scandal had 1000 people in jail by now, and was a fraction of the damage caused to the world economy.
And there's the contradiction. Because, you see, government force against private entities is never ethical.
After those bankers and brokers held guns to their heads and made them sign those mortgage documents? What are you, some kind of monster?
If what I'm about to say makes you want to freak out, please go back and reread my first post in this thread. An argument can be made that the lenders acted in bad faith by misleading the borrower regarding the loan terms. Is it putting a gun to their head? No. But is it an agreement among equals? Probably not. Who protects the borrower when they agree to a deceptively written contract?
If you can't read a contract, you should not be fucking signing a contract. Deceptively written. Get the fuck outta here with this bullshit. It's not deceptive to decline reading the fine print out loud for you. That information is handed to you for you to read at your leisure. Maybe you're too excited about acquiring a new materialism trophy to bother with trivial details like the terms of a 30 year contract you're signing, but that's your problem. If you're too willfully ignorant to understand what you're getting yourself into, then maybe you should live without the "bank owns a house for the consumerist lemming" merit badge.
One of the principles my dad always expressed while I was growing up was this: When you're talking about spending x, why worry about spending y% of x? When you're spending $40,000 on a vehicle, why worry about spending $2,000 for that "must have" option? When you're talking about the largest expense most people will ever incur, why not spend a couple hundred bucks to have a lawyer you trust read the contract? Sent from my iPhone
Your ignorance does not make you a "victim" of "predatory" anything. Managed to avoid variable rates and balloon payments.
http://money.howstuffworks.com/predatory-lending2.htm Can you believe that many lawyers are employed specifically so the contracts they write can't be understood by laymen? The concepts in the contracts aren't difficult at all, but the language is intentionally written so that you can deceive the person on the other end? No force or fraud, but hey, if its written by a lawyer it can't be fraud, right? Even if its intentionally written to deceive? Oh, wait, even the Courts don't agree with that concept.
Truthfully, I don't have a lot of sympathy for anyone who was dumb enough to saddle themselves with an ARM. I took one look at those and said "oh HELL no."
most people who take an ARM either don't understand what it is, or are making a bet and trying to time the market. I have no sympathy for the latter group.
Pretty much. Seven years ago, I had signed up to be a part of the World Leadership Group MLM, which sold ARMs almost exclusively. When I had seen the inital presentation, I thought the concept made sense; but now, I can see what a complete BS system that was for the people entering these loans...especially when so many of them barely qualified for even traditional loans. Not surprising, the company went tits up in '11 and the founder himself went bankrupt.
I bought my first house in 98 and 2nd in 02. While saving up I read, a lot. Our local paper on Sunday runs a section on real estate. In those articles were plenty of articles warning of the dangers of ARMs and interest only loans. There were ads and notices for seminars and classes put on by various groups like HUD to educate the first time home buyer. The lendees were just as guilty of being greedy and willingly turning a blind eye. No one held a gun to their heads and made them sign.
You've got to look at who you're talking to. In their minds Americans are too stupid to care for themselves so a wise and benevolent Government will do it for them. Eternal wards of the state!
