http://www.pbs.org/newshour/bb/busin...ain_09-19.html
Different view -
Moody's concerned by Richmond, California's plan for mortgages
http://www.reuters.com/article/2013/...0HG1S420130920
Is this a novel approach or risky ?
It will being interesting to see how this plays out.
Oddball
Why don't you knock it off with them negative waves?
Why don't you dig how beautiful it is out here?
Why don't you say something righteous and hopeful for a change?
From Kelly's Heroes (1970)
Are you sure you're not hurt ?
No. Just some parts wake up faster than others.
Broke parts take a little longer, though.
From Electric Horseman (1979)
Even if found to be legal, the lunatic fringe elected to make decisions for this highly dysfunctional city will doom the program to failure. Trust me.
A nuisance may be merely a right thing in the wrong place — like a pig in the parlor instead of the barnyard.
On one level this sounds like a lawyer's dream. Say this was proposed in Virginia's Richmond. The major hiccup (IMO) would be the Kelo inspired constitutional amendment forbidding eminent domain for economic development purposes, and specifically, the concept of public use. Technically, those thousands of people who hold title to the mortgage backed security are potentially having their property infringed for the benefit of the homeowner. Is foreclosure assistance a public use? I can only imagine what the more libertarian minded would conclude.
On the other side, the idea that no one will be able to get a mortgage in the city is absurd. I was under the impression that the Community Reinvestment Act mandated that banks were not allowed to discriminate in the services provided at their physical locations. That was one the impetus of the act, banks weren't providing loan services in predominately black areas, when otherwise they provided a slew of loan services in the white areas. Are we to assume that national and regional banks will physically move their offices, and cut off other non-mortgage revenue streams? I can see points being added to a loan, but over the aggregate, how much are we really talking? If banks charge too much, someone will come in with an exotic product that will eat up additional revenue.
For this to work nationally, there is going to have to be a lot of political support. Given the fact that banks and other FIRE industries finance most national political campaigns, I don't see that happening. It is going to be kicked around in court for so long that the market fundamentals being attacked will change by the time everything is said and done.
The courts have always given wide latitude to cities for community redevelopment. As for the lending community political risk is something that is always a factor when investing and I don't buy the argument that Richmond will get redlined if the program gets approved...it sounds like a hollow threat.
"If you don't like change, you're going to like irrelevance even less" General Eric Shinseki
I saw the segment on PBS. It seems clear that the city can justify taking properties in foreclosure for the purposes of "saving" a neighborhood. After all, it was for slum clearance that urban renewal was first begun which later evolved into redevelopment. However, I wonder if Richmond has a redevelopment plan to mesh with the eminent domain actions. Somehow I think they are going about it more ad-hoc than following a plan. I would think in California that consistency with a redevelopment plan is typical for municipalities.
As far as major finance interests go, I'd bet they'd try to "teach Richmond a lesson," so to speak. It could be that "redlining" the municipality is not legal, but I also wonder how it would play out in the courts since it wouldn't be a race-based discrimination action on its face. It would be more of an economic justification. (But I'm not in touch with the fineries of that legal landscape.) Still, filing a suit for redlining for a novel case like that is bound to be bound-up in the courts for years.
Logically everything ought to come first.—Jean-Jacques Rousseau.
I have been following this for awhile. It's a fascinating proposal which takes the use of Eminent Domain to a level I didn't think was possible or legal. I can't wait for this one to play out.
The content contrarian
I know that the local county was also considering this. I have not been following up on their progress, but it is an interesting prospect.
And that concludes staff’s presentation...
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