Taking Mortgages Through Eminent Domain: Not the Solution to the Housing Crisis
NAR attended a recent symposium in Washington, D.C., sponsored by the Mortgage Bankers Association that highlighted the many concerns and questions regarding a new proposal being considered by several local governments across the country to seize mortgages by using their eminent domain authority. In particular, the proposal is moving forward in San Bernadino, Calif.
Alfred Pollard, general counsel for the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, expressed reservations about the proposal and said that using eminent domain to seize mortgages, as opposed to physical property such as homes, would create problems for secured lending in the future.
Walter Dellinger, a former U.S. Solicitor General and now a lawyer with a prominent law firm in D.C., raised issues related to property rights and the 5th Amendment of the Constitution. Dellinger stated that significant legal questions would be raised regarding both the "public use" and "just compensation" clauses of the 5th amendment if this proposal was to move forward.
NAR has written a comment letter to the FHFA expressing our deep concerns regarding this concept, and is carefully monitoring the proposal as it moves through the San Bernadino County Council.