by Ethan Handelman, National Housing Conference
A bill introduced by Representative John Campbell of California today would prohibit federal backing via FHA, VA, Fannie Mae, or Freddie Mac for loans in counties where a municipality has seized a mortgage loan through eminent domain. The accompanying press release pulls no punches, calling the proposals for eminent domain seizure of performing loans “atrocious, corruptive, irresponsible and unconstitutional”. The bill, titled “The Defending American Taxpayers from Abusive Government Takings Act,” has been submitted to the House Financial Services Committee and awaits a bill number.
NHC has spoken out against the eminent domain proposals primarily on practical grounds. Although eminent domain powers are essential tools for neighborhood revitalization and community development, the proposed use on performing mortgage loans would do more harm than good, serving mostly to shift economic returns from one set of investors to another. For more, read NHC’s letter urging FHFA to make the consequences of the proposal clear to localities considering it.