Supervisor David Campos Introduces a Resolution Supporting Use of Eminent Domain on Underwater Mortgages
The Legislation: On September 10, 2013, Supervisor David Campos introduced a resolution regarding the use of eminent domain on houses with underwater mortgages. The resolution is a declaration of support for the City of Richmond, which is planning to fight future foreclosures by using eminent domain to forcibly buy underwater mortgage loans from their lenders at values significantly below market rate. The resolution also directs San Francisco city government to conduct a study on underwater mortgages and explore similar programs for San Francisco homeowners.
The REALTOR® Impact: If the resolution passes, the surrounding neighborhoods around eminent domain will likely see a dramatic drop in property value due to the extreme undervaluing of the government's eminent domain transaction. Mortgage credit availability will likely become extremely restricted within the city and Fannie Mae and Freddie Mac will consider limiting, restricting, or ceasing business activities within San Francisco. Potential homebuyers across all markets will suddenly face large barriers to credit and overall property values across the city will fall. Local governments who have utilized eminent domain have seen a freeze in their municipal bonds, and Moody's has reported that any government entity pursuing eminent domain will face a negative impact on their credit rating.
Learn More: Contact SFAR GADs Mary Jung or Jay Cheng to learn more.