SIFMA Opposes Use of Eminent Domain; Will Cause Irreparable Damage to Recovering Housing Market
(SIFMA) -- New York, NY, September 7, 2012—SIFMA (Securities Industry and Financial Markets Association), along with 25 other trade associations, today expressed its opposition to the current proposals to use eminent domain to take mortgages from residential mortgage-backed securities (RMBS) held in existing investment portfolios and restructure such loans through FHA and Ginnie Mae. SIFMA and the coalition of trade groups are actively working together to advocate against this clear abuse of the sovereign power of eminent domain, emphasizing that recently proposed plans regarding the use of eminent domain to seize mortgage loans are unconstitutional on multiple grounds and violate federal and state laws.
The organizations expressed their united view in a to the Federal Housing Finance Agency’s August 9, 2012 publication of a notice requesting comments on the potential use of eminent domain. The groups share many of the concerns FHFA raised in its notice, including the impact of eminent domain plans on mortgage lending, mortgage finance markets and mortgage investors, concerns regarding valuation and the profit motivation that underlies this scheme, and the constitutionality of the proposal.
“If these proposals go forward, there will be a severe, negative impact on mortgage markets, and therefore on mortgage borrowers,” said Randy Snook, SIFMA executive vice president, business policies and practices. “The use of eminent domain confronts lenders and investors with an unquantifiable new risk, which will reduce the amount of credit available to potential homeowners and causing irreparable damage to the recovering national housing market. These negative outcomes will vastly outweigh any small benefits that jurisdictions might hope to achieve using these proposals.”