Is eminent domain about to strike the U.S. on a grand scale? Will it crush your portfolio or are you aware of how to tactically navigate the obstacles it proposes?
A new report published by the Federal Reserve of New York has been said to revive discussions of eminent domain proposals, as to obtain mortgages secured by single family homes and write them down.
Using eminent domain to seize mortgages was a hot subject a few months ago, as municipalities in California and New York contemplated using their powers to stem foreclosures and eliminate negative home equity.
While this may sound like a really good plan for homeowners, redistributing the wealth in such a way could serve to bring everyone down.
Industry analysts and associations are seriously concerned about the potential negative effects of the recent eminent domain proposal. Individual real estate investors and investment companies can help the nation on a personal level by flipping houses and buying mortgage notes. Some believe investor participation can do far more good than widespread eminent domain practices.
Seizing mortgages through eminent domain could cause a massive hit to those invested in them. This could ultimately limit the ability to borrow, spike interest rates, deflate demand, and restrict the ability to sell, eventually pulling down home values.
Though viewed negatively, eminent domain is still in practice. Some have successfully lobbied to have land seized for development for ‘high and better’ use, and more taxes for local government. Alternatively, investors can buy homes in the path of development and let property be taken by eminent domain as property values rise, eliminating the need to market for sale. Watch out for it, but also know how to use it profitably.