Exactly who are they trying to protect?
HW-
Rep. John Campbell, R-Calif., introduced federal legislation Thursday to prohibit the government from backing mortgages in areas where underwater loans are seized through eminent domain.
The bill amends Fannie Mae and Freddie Mac charters, forbidding them from financing loans in counties or cities that cleared such eminent domain plans within the previous 10 years. It also keeps the Federal Housing Administration and the Department of Veterans Affairs from insuring mortgages in these areas.
The government financed roughly 95% of the mortgage market since it crashed in 2007.
Several local governments in areas hardest hit by that crisis are considering eminent domain plans proposed by an investor group led by Mortgage Resolution Partners. Using the private capital to pay bond investors at a determined market value, the loan will be written down and refinanced into a government-backed mortgage.