Washington D.C. (PRWEB) June 15, 2013
Wall Street’s Apollo Financial Group poses an alternative solution to seizing mortgages by eminent domain and a paper by the New York Fed.
A new report published on June 10th by the Federal Reserve Bank of New York has revived talks of eminent domain to solve the mortgage crisis. However, Bloomberg reported on June 11th, 2013 that many sizable financial industry heavy weights including the Securities Industry and Financial Markets Association continue to oppose the idea due to anticipated investor losses and increased borrowing costs.
The paper by Cornell University professor Robert Hockett “Paying Paul and Robbing No One: An Eminent Domain Solution for Underwater Mortgage Debt” poses that while principal balance reduction is recognized by many analysts as the best way to overcome the plethora of underwater mortgages in the U.S. and to a final stop to the foreclosure crisis, the best way to streamline this may be for governments to utilize their eminent domain powers.
Eminent domain laws allow state and local governments to seize property for ‘higher and better use’. This has often been used to clear private homes for educational sites, airport expansions and other commercial developments. Under this proposal municipalities could seize mortgages and restore equilibrium between mortgage debt and current property values.
The obvious concern and reason that this strategy has not yet been actively put into play is that it could potentially destroy confidence in lending and safety in investing in new debt in the U.S., as well as causing major immediate losses for holders of related securities around the globe.
New York’s distressed debt experts at Apollo Financial Group are confident that they have a healthy alternative which can provide the best of both worlds. That is helping underwater homeowners to reduce debt and keep their homes while keeping mortgage lending profitable and attractive to lenders and private investors.
According to Apollo Financial Group’s website the distressed debt investment firm has been creating “win-win situations for lenders and homeowners” by acquiring non-performing mortgage notes.
Apollo recently announced that it opened up this opportunity for a broader base of sophisticated private investors to invest in first and second lien mortgage notes and consumer debt, enabling them to enjoy good returns, steady cash flow and provide relief to the public.
Under this scenario banks, mortgage lenders and investors in mortgage backed securities could give up a lot less than under a widespread eminent domain plan. This would not just minimize losses but according to Apollo Financial Group’s Founder and CEO, Dean Anastos would “be better for individual homeowners, the U.S. housing market and the American economy by protecting home values, maintaining sustainable growth in real estate markets and fueling national economic growth”. Mr. Anastos went on to point out that for American homeowners, their residences is frequently “their most significant source of wealth building and net worth”. As we’ve experienced over the last seven years, any tightening in home loan markets could negatively affect home prices and equity levels, as well as bruising consumer confidence.
Apollo has put up a web page fully explaining the proposed alternative at http://apollofinancialgrp.com in addition to announcing a live event in Sunny Isles Beach, Florida on June 22nd which will provide more details on how to conduct due diligence for those considering investing in non-performing mortgage notes.