The state of California has been plagued with foreclosures, and dwindling property tax revenues. As a consequence, the state has passed laws to make foreclosure harder and several cities are considering a controversial move to give some relief to underwater homeowners.
Cities in San Bernardino County are considering using eminent domain and venture-capital loans to purchase homes from individuals, who owe more than they are worth. The homeowner will then be issued government-backed mortgages for less than the current value of their homes.
San Bernardino County, Riverside and Fontana have decided to consider the proposal introduced by Mortgage Resolution Partners, but there is some controversy over using eminent domain to make this plan work. Mortgage servicers say this move could send shockwaves through the market by spooking investors and tightening up the availability of credit.
Foreclosures have a trickledown effect, values of home plummet, cities and states lose much needed property revenue and people who are underwater often chose to walk away from their homes. It is often in the best interest of the community to try and prevent banks from seizing a home either with the help of a foreclosure attorney or through mediation.
Using eminent domain is a controversial move and could generate lawsuits, but government officials have grown weary of waiting for banks and Wall Street to help curtail foreclosures.
Lenders have been reluctant to offer alternatives to foreclosure such as mortgage modifications, which many homeowners are actually eligible for. Many homeowners have had to turn to foreclosure lawyers just to get a bank to work with them and avoid a loan default.
Aside from denying loan modifications, banks have used fraudulent or faulty paperwork to seize homes. When an individual has received a foreclosure notice and want to fight for their homes, a foreclosure attorney can be instrumental in averting this either through negotiating for a short sale or mortgage modification, or by taking the drastic step of declaring personal bankruptcy.