On August 6, the FHFA sent a notice to the Federal Registry indicating its concern with the proposed use of eminent domain to restructure performing home loans and to solicit public input. Submissions must be received by September 7. FHFA Release. FHFA Notice.
eminent domain
SIFMA Statement on Eminent Domain and TBA Trading
On July 19, SIFMA announced a new policy that mortgage loans to borrowers residing in jurisdictions that have initiated condemnation proceedings to seize mortgage loans through eminent domain will not be deliverable into TBA-eligible securities on a going-forward basis. SIFMA stated that mortgage loans in areas where these eminent domain powers could be exercised would exhibit unpredictable prepayment behavior and destroy the homogeneity among mortgage loans necessary for the proper functioning of the TBA market. In the event that seizures of mortgage loans occur, SIFMA plans to review the facts and circumstances of the situation periodically and will review its policy in light of any changes. Statement.
San Bernardino County Resolution Establishing Homeowner Protection Program via Eminent Domain
On April 10, the San Bernardino County Board of Supervisors adopted a resolution approving a Joint Exercise of Powers Agreement (JPA) between the County of San Bernardino, the City of Ontario, the City of Hesperia and the City of Fontana to establish a Homeowner Protection Program. Under the JPA, the parties will establish a joint powers authority to take actions to assist homeowners, including acquiring underwater residential mortgage loans by voluntary purchase or eminent domain and restructuring the mortgage loans to allow homeowners to continue to own and occupy their homes. Resolution and Supporting Materials.