[via NYT] Eminent domain in Richmond and Bond returns in Detroit will make borrowing difficult for others across the country.
If the effort in Richmond succeeds, the 624 homeowners involved and more in other cities that use the eminent domain approach will benefit from lower payments (and the investors in Mortgage Resolution Partners will see a payoff), but potential home buyers nationwide will be examined with a more jaundiced eye from their lenders than is now the case. Indeed, the reaction of financial markets to the Chrysler bankruptcy suggests that favorable court rulings or other such tidings could lead to higher mortgage interest rates nationwide even before the final outcome is known on the legality of this use of eminent domain.
Just as other municipalities in Michigan are finding it more difficult to borrow in the wake of Detroit's proposal to change the historical understanding of its bond obligations, so too might American families face a steeper challenge as they look to become homeowners if lenders cannot count on homes' standing as collateral behind mortgage loans.
Just as other municipalities in Michigan are finding it more difficult to borrow in the wake of Detroit's proposal to change the historical understanding of its bond obligations, so too might American families face a steeper challenge as they look to become homeowners if lenders cannot count on homes' standing as collateral behind mortgage loans.
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