The president of the California Association of Mortgage Professionals is warning that the eminent domain proposal being considered by San Bernardino County and the cities of Ventura and Ontario could curtail new mortgage lending in those municipalities.
Fred Kreger, who is also vice president of operations for American Family Funding in Santa Clarita, asked rhetorically if the program were ever to be implemented, “is anybody going to lend in that area?” He was speaking late this week to the organization’s members at its annual convention in Newport Beach.
The proposal, which is being advanced by a private organization called Mortgage Resolution Partners, calls for municipalities to use the power of eminent domain to seize underwater mortgages. The proposed strategy is a major concern for loan servicers and investors – and originators as well, Kreger said.
When an audience member commented that bank lenders would have a Community Reinvestment Act compliance problem if they were disinclined about lending in a certain area, Kreger said if eminent domain becomes a reality it would have huge repercussions.
Mortgage originators also need to be concerned about the effects on their business of the recently signed California Homeowners Bill of Rights, said CAMP’s vice president of government affairs, Michelle Velez, who is the broker of record at Partners Mortgage, San Jose.
The new law could have unintended consequences for consumers, as it could make mortgage lending in California more expensive, she said.
