Good News for Perspective Homebuyers in Seattle
Mayor Says No to Eminent Domain
As reported by email blast earlier this Spring, homebuyers in the Puget Sound market who rely on readily available mortgage credit won an important victory, when Seattle Mayor Ed Murray says he opposes a recent proposal to use the power of eminent domain to condemn residential mortgages in the city.
The Seattle City Council has been examining a scheme devised by Mortgage Resolution Partners to have the city condemn performing mortgages of distressed homeowners and then issue new mortgages to those homeowners through a program run by the city.
REALTORS®, mortgage professionals and lenders have been concerned that use of eminent domain to condemn mortgages would severely disrupt the home-buying market and unfairly restrict access to mortgage credit for consumers in the greater Seattle area. In 2013, the Federal Housing Finance Agency (FHFA) issued a statement saying it could use its regulatory authority to prohibit Fannie Mae and Freddie Mac from participating in markets that “employ eminent domain to restructure mortgage loan contracts”.
In his comments before a meeting of the Seattle Mortgage Bankers Association this spring, Mayor Murray said he believed the City of Seattle’s use of eminent domain in this fashion would be detrimental to the broader real estate market and that he opposes its use for underwater mortgages. The Mayor said he looked forward to working with the real estate industry to seek affordable housing solutions for the city.
For the past year, industry partners, including the SEATTLE KingCounty REALTORS®, mortgage brokers and lenders, have worked together in making the case to the city that this unusual, untested and highly controversial use of eminent domain would not be an effective way to resolve issues related to distressed properties. The National Association of REALTORS® has provided us with extensive research and resources on this topic since it was first proposed by the City of Richmond, California.