Use of Eminent Domain Will Cause Irreparable Damage to Recovering Housing Market

by 07 Sep 2012

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.” 


  • by 5pence | 9/7/2012 4:12:52 PM

    The mortgage contracts aren't legal anyway. The banks broke the contracts at signing by securitization and clouded all the titles they had their hands on. I wish these guys would stop whining and start addressing the real problems. The real problem isn't that SIFMA won't make a profit - it's that the contracts are null and void. No one knows who owns them and if the states stand up and claim them, they are doing you a favor.

    Long-standing black letter mortgage law – the 1872 US Supreme Court precedent Carpenter v. Longan, 83 U.S. 271, at 274, inter alia, which states any separation of the Note from the Deed of Trust is a Nullity. “The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity”.

  • by TomZeus | 9/10/2012 7:28:23 AM

    You just have to love schemes on how to side step responsibility for a mortgage (yeah I get it's ugly out there)...but to hear this crap: I was tricked into signing this mortgage or why should I have to pay this back the house isn't worth what it was when I took out the mortgage...well were you tricked into depositing the proceeds from the third and fourth refi mortgage so you could payoff your credit card balances and auto mortgages, or buy cars, motor homes and jet skis or take those great vacations??? Or maybe the excuse was to keep up with the Jones on the home purchase you had to lie on the application to qualify for? Ok I understand

    It'll be interesting to see one of these municipalities move forward on this and then hear the screams when the local citizens can't get a mortgage again in those areas.....oh yeah, the government will come in and say that's Disparate Treatment, you can't charge more for risk in these areas or you have to lend there, you bad lenders are punishing borrowers for the dim witted acts of politicians trying to get votes!


Should CFPB have more supervision over credit agencies?