The plan to use the government's power of eminent domain to seize underwater home mortgages and sell them to private investors with ties to the Obama administration, reported here last week, is moving ahead.
The San Bernardino Sun reports:
San Bernardino County will enter into a partnership with Ontario and Fontana to look into a program with a unique approach to assisting underwater homeowners -- using eminent domain to seize ownership of their loans.
The Board of Supervisors agreed at its meeting today to form a joint-powers authority with the two cities to explore the development of the program, which may include acquiring loans on properties facing negative equity by either voluntary purchase or the use of eminent domain...More than 150,000 San Bernardino County homeowners are underwater on their mortgages, and more than 50,000 of those mortgages - roughly 20 percent - are held in private- label mortgage-backed securities...
Backup material is available at the San Bernardino County Board of Supervisors Web site.
Not much of the rest of the press has woken up to this one yet, but it has the potential to be a big story. The American Securitization Forum, a trade association for the securitization industry, notified members about the San Bernardino Action and said it "is currently studying the implications of the adopted resolution."