Dr. Housing's New Frankenstein "Eminent Domain"

Remember the tale of Dr Frankenstein who stitched together parts of various dead people in order to create new life? His handiwork created a living monster. Is anyone else besides me reminded of this story while reading the latest attempt to breathe life into the housing market? A proposal out of California ( San Bernardino County) to use Eminent Domain laws as justification to seize current mortgages from original bond holders, reduce the principal, and hand them over to new investors all in the name of keeping people in their underwater homes is the latest in a long line of well meaning, but ultimately , ill-conceived “homeowner assistance” acts. In this case, the seizures and principal reductions won't be applied to delinquent homeowners, rather to homeowners who are making their loan payments on time but are underwater on their mortgages. Venture capital firm Mortgage Resolution Partners would seize the loan from bond holders, with legal approval from the county in a whole new interpretation of Eminent Domain laws. These loans would then be reduced in principal, and newly re-issued and held by the seizers. The original lien holder would be paid off based upon “fair market value,” to be determined by the city and its venture capital partner. So, the original bond holders lose money, the venture capital firm (in theory) makes money, and the homeowner gets a new loan with reduced principal. Eminent Domain laws give power to the state to appropriate property for public use. To interpret these laws in order to justify seizing private investments from one entity, and hand it over to another, is to create a wholly new legal creature. Mary Shelley's tale of a mad scientist manipulating life is more than just a scary story. The tale is also a caution against unintended consequences that may result from extreme overreaching, regardless of the original good intent. This plan from Mortgage Resolution Partners, who stand to make money on this deal, would allow the government to step in and redo contracts between the private sector and consumers. Keep in mind that these homeowners are making their payments, none are delinquent, and the original lender is continuing to collect the amount due according to the original contract. If the government is allowed to use their power to interfere and seize the loan, then that could cast doubt over the future of contracts and lending in this country. If I was a lender and knew that a county could seize my contracted loan for Eminent Domain use, then I would have to protect my investment and consider higher risk pricing for counties that used this legal act. A legal argument for the use of Eminent Domain in this case must make the assumption that these loans are underwater and likely to eventually default, and therefore the original investor is receiving fair market value in any payout. Imagine if every county in the United States decided to apply the law of Eminent Domain in order to seize the capital excess of a financial bubble, and then reduce debt for those who are current on their mortgage payments. We are looking at hundreds of billions of dollars worth of mortgage debt that would need to be seized by the government and redone. Meanwhile, as original bond holders saw capital losses, the Venture Capital Firm working in conjunction with the cities, would see (theoretically) gains. And, those lucky homeowners who were part of the action would have debt forgiven, whereas all future homeowners in those areas would likely be subject to higher loan interest rates to compensate for the future potential losses. One can imagine the possible cascade of consequences from this for the county. If this did result in higher interest rates for the area, then housing prices would inevitably fall. And what about future business? Would business want to move into an area where their employees would be paying perhaps up to 3% higher interest rates on home loans? Every single lending institution even Freddie and Fannie would have to add the prospect of a mortgage seizure under the laws of Eminent Domain if a home's value drops below what is owed. Certainly, pricing this risk into the costs of a loan would make sense. How could we ask lenders not to be wary of that risk, when government could come in, seize your loan, and give you only what they deem fair value of your debt? If this passes In San Bernardino county, Chairmen of Venture Capital firm Mr. Gluckstern has said, “…if it works, every mayor of every city is going to want to do this.” If this works, this would create a crony capital monster, whose victims will be future homeowners trying to get loans, bond holders left holding the deflated bags, and taxpayers footing the bill for legal fees to defend the government's position. This seems to run counter to our principals as a free market country, whose laws protect private property and private contracts. This is the worst example of a long line of “solutions” to help the housing market, none of which have allowed natural market forces to come to bear. I should state that I don't think this will pass. But if California, a state which is already in woeful economic shape, enacts this then the rest of the America will get a free look at a bad idea. We don't need another “creative” intervention in the housing market. The struggles in the real estate market, if left to play out naturally, will eventually result in a healthy , normal market. To embrace the idea that homeowners or borrowers can look to the government when they get into debt over their heads is insane. But if this does pass, what next? Don't be surprised if California next uses Eminent Domain to seize student loan debt. Our good intentioned Dr. Frankenstein is collecting his body parts and planning the creation of his monster. Do we stop him now and get him into grief counseling to accept death -- or close our eyes and let all of society suffer the inevitable consequences?
Posted In: PoliticsEconomicsGeneral

11 Best Black Friday Deals on Amazon

11 Best Black Friday Deals on Amazon

The best Black Friday deals from Amazon are still coming hard and fast because the holiday is not yet upon us and the mega-retailer prefers to keep consumers on the hook for as long as possible—spending as much money as possible. 

To that end, here are some of the best Black Friday deals from Amazon that you might want to consider today.

Calphalon 10-Piece Pots and Pans Set

Regular Price: $172

Sale Price: $138.88

Calphalon’s 10-Piece Pots and Pans Set is designed with stainless steel, stay-cool handles along with pour spouts. The nonstick surface is PFOA-free and built with hard-anodized aluminum that is both durable and conducts heat extremely well. The set includes 2 fry pans, a sauce pan with cover, saute pan with cover and large stock pot with cover.

Apple AirPods 2nd Generation

Regular Price: $144

Sale Price: $85.49

The 2nd Generation AirPods from Apple connect to all Apple devices and give you an enhanced listening experience. Plus, they come with a case that keeps them safe and allows you to charge them in a secure environment. With over 24 hours of battery life, access to Siri and easy setup, you can start listening to your favorite tunes or podcasts today.

Adidas Ultraboost 21 Running Shoes

Regular Price: $129.98

Sale Price: $89.98

The Adidas Women’s Ultraboost 21 running shoe is perfect for anyone who likes a short run, maybe a 5K, half marathon or more. Coming in several colors and styles, you can slip these shoes on, enjoy the cushioned outsole, sink into the supple insole and secure laces.

Ninja AF101 Air Fryer

Regular Price: $129.99

Sale Price: $97.83

The Ninja AF101 Air Fryer allows you to crisp, roast, reheat and even dehydrate food products faster and cheaper than ever before. It has a 4-quart capacity and offers a wide temperature range along with several time settings so that you can customize each dish to your needs. Plus, all the parts are dishwasher safe.

Beats Solo3 Wireless On-Ear Headphones

Regular Price: $199.95

Sale Price: $99

Beats by Dr. Dre are among the best headphones on the market, and the Solo3 Wireless On-Ear Headphones include the Apple W1 chip, Class 1 Bluetooth and 40 hours of battery time. These headphones even have a built-in microphone and offer an adjustable fit so that you can be comfortable whether you’re listening to an Android or iOS device.

Hoover Power Scrub Deluxe Carpet Cleaner

Regular Price: $198.98

Sale Price: $175.98

The Hoover Power Scrub Deluxe Carpet Cleaner allows you to keep your home spotless and clean up after your pets. The cleaner comes with the Hoover Paws and Claws Deep shampoo and a storage mat to keep the floor dry once it’s put away.

LG CordZero Auto Empty Cordless Stick Vacuum

Regular Price: $999.00

Sale Price: $851.71

The LG CordZero Auto Empty Cordless Stick Vacuum and Wet Mop All in One Tower is designed to work in homes with several pets or children and clean up all the messes that life brings. The battery lasts up to 2 hours, and there’s an extra removable battery that gives you even more cleaning time and power.

Breville Fresh and Furious Blender

Regular Price: $278.60

Sale Price: $199.95

Breville, a top name in blenders and juicers, offers the Fresh and Furious Blender, featuring 50-ounce capacity, Vac Q technology, pre-programmed cycles, LCD display and lid with pull ring. With the Fresh and Furious Blender, you can make everything from a smoothie to a soup and everything in between.

Hot Tools Professional 2000 Turbo Ionic Hair Dryer

Regular Price: $89.99

Sale Price: $55.63

The Hot Tools Professional 2000 Turbo Ionic Hair Dryer is designed for professional use, but it works perfectly in the home. With 1875 watts of power, 6 heat and speed settings and a lightweight design, you can easily style your hair and utilize the diffuser, cut back on the frizz and stretch the 8 ft cord for maximum functionality.

Columbia Heavenly Long Hooded Jacket

Regular Price: $160

Sale Price: $97.38

The Heavenly Long Hooded Jacket from Columbia is designed to be light for everyday use, but it’s heavy enough to protect you from the cold. The plush fleece lining, security pocket, water resistant fabric, 2-way zipper, and zippered hand pockets make the jacket both protective and functional.

ConAir InfinitiPro Hair Dryer

Regular Price: $49.99

Sale Price: $29.99

ConAir is one of the biggest names in hair and beauty, and the InfinitPro is an 1875 watt hair dryer designed for professionals with ceramic technology. The dryer comes with a diffuser and concentrator, and it allows you to blow out your hair just the way they would at the salon.

Deals the Experts Are Hoping For

Experts believe that Amazon’s Black Friday sale could linger for quite some time. It all started with the Prime Early Access sale on October 11 and 12. Previously, Amazon has offered the “Epic Deals” sale that ran through late October. 

This is to say that any sale could come up at any time. 

Even so, those monitoring Amazon are looking forward to a few potential deals, including:

  • Apple Watch
  • AirPods (any generation)
  • MacBook Pro
  • Large, underpriced TVs
  • Amazon Echo
  • More small home appliances (Dyson or Shark vacuums, Instant Pots, etc.) 

While these predictions are based on last year’s Amazon Black Friday Sale, it’s important to remember that most Black Friday sales are fairly consistent and push the products that are most likely to sell.

 

Featured image sourced from Shutterstock

Posted In: Partner ContentGeneral