Foreclosure 'Solution' Smacks of Crony Capitalism

Photo Credit: human Events The real-estate market is reviving so quickly that talk of the busted housing bubble is passé. These days, when real estate investors talk about bubbles, they are referring to the new one that might now be inflating as home sellers sift through a frenzy of offers.

Even cities that bore the brunt of the foreclosure crisis are seeing massive price jumps and many homeowners who were “under water” in their mortgages can start talking “home equity” again.

Yet some government officials seem to live in a time warp as they pursue a murky deal to “solve” the dissipating housing crisis by marrying government power with private enrichment. The Bay Area city of Richmond is the first one to sign on to an idea that lenders fear could sweep the state.

City officials would use eminent domain — i.e., the power to take property by force, upon the payment of “fair compensation” to the owner — to wrest control of hundreds of mortgages held by private-equity firms. They’re not taking the actual property, mind you, but grabbing the notes held by those who financed the homes.

Advocates see it as a way to halt foreclosures, but foreclosures are working their way out of the system — so much so that first-time home buyers struggle to compete with cash-paying investment groups that are grabbing these properties.

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