Jan. 24 (Bloomberg) -- A California county executive who has led his area’s exploration of mortgage seizures to help homeowners said he’s against moving forward with the idea.
“I don’t want to consider proposals that would utilize eminent domain over the opposition of stakeholders,” San Bernardino County Chief Executive Officer Greg Devereaux said today at a hearing of a so-called joint powers authority created by his county and two California cities last year. “I don’t want to proceed in that manner.”
Advocates led by Mortgage Resolution Partners LLC have called for local governments to force sales of securitized mortgages so they can be reworked, helping homeowners with loans larger than the value of their properties. Investors such as Pacific Investment Management Co., which runs the world’s largest bond fund, and at least 18 groups representing bankers, home builders and other financial-services firms have opposed the idea.
Claims that the use of eminent domain would “affect our market in a very negative way,” by raising borrowing costs for new loans, suggest the step is too dangerous, Devereaux said.
“It would be wrong for me to introduce that risk to the community without the community saying we want to take that chance,” he said at the hearing, where the authority he chairs will vote to request proposals to help homeowners. “That level of support has not materialized.”
The use of eminent domain to help homeowners has also been considered over the past year by local officials from elsewhere in California to Illinois, New York and Massachusetts.
To contact the reporters on this story: Jody Shenn in New York at email@example.com;
To contact the editor responsible for this story: Alan Goldstein at firstname.lastname@example.org