NYC Mayoral Candidate Carl Person Creates Ballot Initiative for Principal Reductions and Lower Interest Rates for Under-Water Mortgages

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Interest and principal-reduction relief for homeowners with under-water mortgages may become available in New York City and in other New York State municipalities through local laws enacted by local voters. On August 8, 2013, the Federal Housing Finance Agency has threatened to take away all federal mortgage financing for any state, city or municipality using eminent domain (i.e., condemnation) to keep homeowners in their under-water mortgaged homes.

The proposed law ... could be used by any other city, town or municipality in any state to help solve the foreclosure crisis.

Carl Person, the Reform Party nominee for NYC Mayor, announced today "I have drafted and am seeking voter signatures for a proposed NYC law for adoption by NYC voters that would provide for eminent-domain condemnation by NYC of any 1-4 family building, condo or coop unit in which the owner resides if the mortgage is unaffordable by the homeowner and is under water by 10% or more (that is, where the amount owed on all qualifying mortgages is more than 110% of the market value of the property without such mortgages), but the owner could afford a mortgage refinanced at the present market value of the property at the present market rate of interest."

http://www.lawmall.com/nycballotinitiatives.php

Person stated that "To go on the NYC ballot at a general election the petition will need at least 30,000 signatures by NYC registered voters, after which the NYC Council will be given the opportunity to accept or reject the proposed law and, as a practical matter will reject the proposed law because it at any time could have enacted such law if it wanted to do so, after which the supporters of the proposed law will need to obtain at least 15,000 additional signatures within a 60-day period." Once this is done, stated Person, "the proposed law, as a "ballot initiative", will be placed on the ballot at the next general election for adoption or rejection by NYC voters.

The proposed law is available for review, downloading and printout at

http://www.lawmall.com/nycballotinitiatives.php

Person states that a law along these lines "could be used by any other city, town or municipality in any state to help solve the foreclosure crisis."

Person went on to say that "Under-water mortgage condemnation, under the proposed NYC law, would be done by NYC at no cost to NYC through a group of proposed "Property Intermediaries" including purchasers or joint venturers or other interested persons including banks, investors, REMIC trusts, other financial institutions or non-profit agencies on a competitive basis to refinance the property at the present reduced property value at the present market rate of interest for refinancings of the same type." [See the Petition, page 2, under the heading starting "Submitted in Support of the Petition..."]

Person also said that "NYC would be able to encourage refinancings with deferred payment of real estate taxes, if needed, to enable the homeowners to qualify for the refinancing."

law.onecle.com/new-york/real-property-tax/RPT01184_1184.html - see paragraph 2, providing for up two 2 years for installment repayment of delinquent real estate taxes on residential property.

Person continued, "Title to the real property would be held in trust for the homeowner by the Property Intermediary until any liability of the homeowner for a deficiency judgment on the current note and mortgage are extinguished by release, passage of time (6-year statute of limitations) or quiet title action." [See the Petition, page 2, paragraph 8]

Carl Person states "I wrote the proposed law after learning about the 5-year effort by a privately-owned company, Mortgage Resolution Partners L.L.C. (MRP), to enter into contracts with some municipal and county governments for condemnation and refinancing of under-water mortgages."

Person also states that "These efforts (now only days before a first condemnation and refinancing for a number of mortgaged homes in Richmond, California) have been temporarily halted with two federal lawsuits commenced in the Northern District of California against MRP and the municipality of Richmond, California on August 7, 2013 by Wells Fargo and Deutsche Bank (13-3663) and by Bank of New York Mellon (13-3664) as trustees for various trusts of pooled mortgages." Source: http://www.contracostatimes.com/west-county-times/ci_23822956/lenders-sue-richmond-halt-plan-seize-mortgages-through

A copy of the Wells Fargo/Deutsche Bank complaint is available to Pacer members at

http://cand.uscourts.gov/cm-ecf

for the Northern District of California, Index No. 13-3663) and, according to Person, the Complaint "alleges in substance that the proposed condemnations are being done for profit by MRP, at the expense of the trust beneficiaries, that the properties being taken are notes and mortgages (personal property) which are located outside of Richmond, California, and that many of the proposed mortgages to be condemned are in fact affordable by the homeowners involved."

Person goes on to say "My proposed NYC law avoids those 3 allegations. There would be no such profit by NYC or the Property Intermediary. NYC would make no money at all, and all financings would be competitive among investors, banks and others at prevailing rates of interest, with the present note holder having a right of first refusal for the refinancing. The properties to be taken, as real property interests (other than coop units) and not the notes and mortgages involved, are all located in NYC. And homeowners would have to prove they cannot afford the current mortgage as written, so that they only way they can remain in the property is to obtain a refinancing to lower their monthly payments."

In what could result in a campaign disaster throughout the United States for the Democrat Party and its nominees for office, including its nominee for NYC Mayor (to be selected by Democratic voters at the primary on September 10, 2013), President Obama's federal agency, The Federal Housing Finance Agency (FHFA) on August 8, 2013 (after authorizing the two lawsuits against MRP and Richmond, California) has threatened to cut off residential mortgage funding for any state, city or municipality that threatens to use eminent domain (i.e., condemnation) to keep homeowners in their homes. Here is what the FHFA said in its statement dated August 8, 2013 entitled "FHFA Statement on Eminent Domain"

http://www.fhfa.gov/webfiles/25419/FHFAStmtEminentDomain080813.pdf

“In response to an eminent domain action to restructure mortgage loans, FHFA may take any of the following steps: initiate legal challenges to any local or state action that sanctions the use of eminent domain to restructure mortgage loan contracts that affect FHFA’s regulated entities; act by order or by regulation to direct the regulated entities [i.e., Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks] to limit, restrict or cease business activities within the jurisdiction of any state or local authority employing eminent domain to restructure mortgage loan contracts; or take such other actions as may be appropriate to respond to market uncertainty or increased costs created by any movement to put in place such programs.”

Also, see the memorandum of FHFA's Counsel dated August 7, 2012 at
http://www.fhfa.gov/webfiles/25418/GCMemorandumEminentDomain.pdf

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Carl Person

Carl E. Person