In a letter to Federal Housing Finance Agency general counsel Alfred Pollard, NAR made clear its opinion on the use of eminent domain as a tool for helping homeowners.
Quick background: Some areas of California are considering using their eminent domain authority to to take from investors the mortgages of underwater homeowners who are current on their payments, and pay those investors less than what’s owed — sort of an forced short sale. The local governments would then provide the homeowners with a lower-interest loan that reflects the property’s current market value.
The goal is to reduce the number of underwater homeowners, reduce the number of defaults and foreclosures, and stabilize property values.
NAR doesn’t specifically come out against the eminent domain plan, but the letter explains that there are better uses for government time, energy, and money for one specific reason:
Though the proposal … purports to assist borrowers, it does not help those who are experiencing hardships, are behind on their payments, and are most in need.
In other words, focus on the people who really need the help by making it easier for families at risk of foreclosure to refinance by helping them take advantage of programs like HAMP or HARP. “These types of programs provide stability to families and local housing markets without having the potential to adversely impact credit and mortgage availability,” said the letter.