By A.J. Hazarabedian
In a recent post, we talked about the City of Hesperia voting on whether or not to join a Joint Powers Authority to begin acquiring underwater mortgages by eminent domain in an attempt to help homeowners.
Since our post, more information has been revealed providing the logistics to this interesting proposal. A recent Reuters article outlined a plan by Mortgage Resolution Partners to find investors who will finance the process and then turn around and restructure the loans.
The idea is that a local government entity would acquire underwater mortgages by eminent domain, using the money funded by investors, and then pay the homeowners the fair market value for the property. At that point, Mortgage Resolution Partners would work to restructure the loan so homeowners could keep their homes and have smaller mortgage payments.
Per Reuters, Mortgage Resolution Partners is “backed by a number of prominent West Coast financiers,” including Evercore Partners Inc and Westwood Capital, who would be paid back after the restructured loans were sold off to “hedge funds, pension funds and other institutional investors.” This article, “Investors tout controversial “condemnation” for housing fix,” explains that Mortgage Resolution Partners would receive a fee for every loan condemned and restructured.
This is certainly one to watch in the coming months. Many people have been looking for solutions to the housing crisis. Let’s see if this idea gains any more traction.