- Post 19 July 2012
- By Copy Editor
(Andrew Stiles | Washington Free Beacon) -- Local officials in San Bernardino County, Calif., met last week to consider a controversial proposal to use eminent domain powers to seize and refinance underwater mortgages.
The plan, which is being championed by wealthy investors with deep ties to the Democratic Party, has drawn criticism from opponents who see it as an egregious violation of property rights and an exercise in political cronyism.
"This is a group of folks who want to come in and use the government to help acquire properties for them and provide an impressive return on their investment," said Steven Greenhut, a senior fellow at the Pacific Research Institute, a free-market think tank.
The meeting in San Bernadino took place amid revelations that the investors and county officials were involved in secret negotiations for nearly five months before the proposal became public.
The county, along with the cities of Ontario and Fontana, has created a joint authority to consider a plan to restructure mortgages for certain borrowers who are "underwater," meaning they owe more than their homes are worth. Officials estimate that as many as 100,000 mortgages in San Bernardino County are underwater.
The new authority would apply eminent domain power, which allows governments to forcibly acquire private property for public benefit. However, rather than seizing the physical properties in this case, the authority effectively would be purchasing the mortgages owed by the property owners, with the aim of restructuring them and selling them to investors who could then turn a profit by flipping the homes. ... continues...