Proponent of Mortgage-Seizures Would Take Delinquent Debt in Program

Mortgage Resolution Partners LLC, the firm pushing municipalities to seize loans for borrowers owing more than their homes’ values, said it would expand its proposed program to include delinquent and defaulted debt.

The company made the pledge today in a comment letter to the overseer of Fannie Mae, Freddie Mac and the Federal Home Loan Banks, after previously saying only performing mortgages should be targeted. The San Francisco-based firm is seeking to profit by providing services to local governments that use their so-called eminent domain powers to force sales of home loans packaged into securities without federal backing.

The Federal Housing Finance Agency, which also heard today from trade groups opposed to the plan, last month sought comments on the idea, saying it may need to take action against it. The initiative is being considered in areas across the U.S. led by San Bernardino County, California. The FHFA said it was concerned that the plan would damage lending markets and the finances of the companies that it oversees by reducing the worth of their bond investments.

“Governments will pay fair value for all loans acquired by eminent domain, as indeed they are required to do by the courts that oversee all eminent domain proceedings,” Mortgage Resolution Partners Chief Executive Officer Graham Williams said in the letter. That means investors in the securities holding the loans won’t be damaged, he said.

 

Read on.

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