FHFA Weighs in on Use of Eminent Domain for Mortgage Reductions

[ Blog/News ]

FHFA Weighs in on Use of Eminent Domain for Mortgage Reductions

On August 8, the Federal Housing Finance Agency (FHFA) requested public comment on the use of eminent domain authority by municipalities to seize mortgage loans for purposes of offering homeowners a reduced mortgage balance. The County of San Bernardino, California and the City of Chicago, among other municipalities, have expressed interest in eminent domain as a means to reduce the number of residents whose mortgage obligations exceed the current market value of their home.

Under the eminent domain proposal, municipalities would raise funds from investors to provide sufficient resources to condemn individual borrower mortgages. The plan would permit a municipality to condemn any lien secured by real property as long as the holder of the lien is provided just compensation.

Homeowners whose mortgage and other liens have been condemned would then be offered a mortgage loan with a reduced balance, ensuring the owner is in a positive equity position. Municipalities believe reducing the amount of mortgage debt that homeowners carry will stabilize home values, reduce foreclosures, limit community blight, and provide a more stable base of property tax revenue.

In requesting comment on the proposed use of eminent domain to reduce homeowner mortgage balances, FHFA states the agency has “significant concerns with programs that could undermine and have a chilling effect on the extension of credit to borrowers seeking to become homeowners and on investors that support the housing market.” FHFA also reveals that it may direct Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System, which collectively fund more than 60 percent of all mortgages, to “avoid a risk to safe and sound operations and to avoid taxpayer expense.”

To read the FHFA announcement and the Federal Register notice requesting public comment, click here.

As part of our ongoing Mortgage Matters program, CAI is working to protect homeowners in community associations and to ensure access to fair and affordable mortgage products for all current and potential community association residents. You can follow our work and share your thoughts at www.caimortgagematters.org.  CAI will continue to monitor and participate in shaping changing federal housing policies to ensure the perspective of community associations is heard. This is one of the many benefits of belonging to an organization that works for you on the local, state and federal level.

  • Newman HOA CPA - Banner Ad
  • HUB International NW - HOA And Condo Solutions - Web Ad
  • Rafel Law Group - Banner Ad
  • Condominium Law Group, PLLC - General Counsel & Collection Services - Partners Ken Harer & Valerie Oman - Phone: (206) 633-1520 Website: www.condolaw.net
  • Porter Construction Inc - Building With Integrity - www.porterci.com
  • The Copeland Group - Banner Ad
  • Barker Martin

Search WSCAI


Search Business Partners Directory


Diamond Sponsors

  • ServPro Of Seattle NW - Logo
  • Superior Cleaning & Restoration - A COIT Service Company - Logo
  • Rafel Law Group PLLC - Logo
  • HUB International NW - Logo
  • RW Anderson Services - Logo
  • Columbia Bank - Logo
  • Association Reserves WA - Logo
  • Transblue - Logo
  • SageWater - Logo
  • CAU - Community Association Underwriters - Logo
  • CIT - Community Association Banking - Logo
  • Newman HOA CPA - Audit & Tax - Logo
  • Agynbyte - Logo

Chapter Magazine

Journal July-August 2022

Jul/Aug 2022 Issue

Journal Advertising Partners:

  • Newman HOA CPA Audit & Tax
  • CIT Group Inc. - Logo
  • Rafel Law Group PLLC - Logo
  • The Copeland Group - Logo
  • Bell-Anderson & Associates - Logo
  • Community Association Underwriters - Logo
  • Ruff Construction - logo
  • Charter Construction - Logo
  • Popular Association Banking
  • SSI Construction
  • Sagewater
  • RW Anderson Services - Logo
  • Pacific Engineering Technologies, Inc - Logo

  • Pacific Western Bank - Small Ad
  • Association Reserves of Washington - Ad