A coalition of 26 trade associations expressed opposition to the current proposals to use eminent domain to take mortgages from residential mortgage-backed securities (RMBS) held in existing investment portfolios and restructure such loans through FHA and Ginnie Mae, according to a Securities Industry and Financial Markets Association press release on Friday. The organizations expressed their united view in response to the Federal Housing Finance Agency’s August 9, 2012 publication of a notice requesting comments on the potential use of eminent domain. The groups share many of the concerns FHFA raised in its notice, including the impact of eminent domain plans on mortgage lending, mortgage finance markets and mortgage investors, concerns regarding valuation and the profit motivation that underlies this scheme, and the constitutionality of the proposal.
In related news, the House Financial Services Committee is scheduled to hold a hearing tomorrow at 4 p.m. ET titled, "The Housing Crisis and Policy Solutions: Should Eminent Domain be Used to Save Underwater Homeowners?"