San Bernardino County is the birthplace of the first serious consideration by a local government to implement a scheme concocted by former Clinton administration officials and private equity pirates to steal seize underwater mortgages from the lenders in order to write down the principal, refinance them into FHA loans, and sell those loans to new investors (enriching the investment bankers who would fund the scheme). It’s also the place that, when residents publicly objected to the scheme, thumbed its nose at its constituents and forged forward.
Fortunately for all that is right and holy in the land of fruits and nuts, San Bernardino recently came to its senses and abandoned the crackpot plan and opted to submit a request for proposal “seeking plans to address the mortgage crisis.” Given their track record, I suspect they’ll receive and seriously consider plans from the Hells Angels to turn foreclosed homes into profitable meth labs and from Maxine Waters to buy bad loans from whatever financial institution her husband owns these days. I mean, if you’re going to abuse the 14th Amendment, you might as well throw all caution to the winds and just let fly with whatever comes to mind, whether tethered or untethered to reality.
Although the county’s CEO claimed that the threat of eminent domain was interfering with the ability of the county to work on other “solutions” with lenders and mortgage security investors, and that it was “wrong” to impose “unintended consequences” of the loan seizure scheme on residents who didn’t want it in the first place, anyone with an ounce of grey matter in his or her cranium knew of those negative aspects from the outset. Thus, the local yokels at county hall wasted a lot of time stirring the pot, to no avail. However, they have given the voters the appearance of “doing something” and in politics, appearance always trumps substance.
San Bernardino isn’t the first local governmental entity to attempt to play a fruitless populist (i.e., anti-bank) card to win a PR coup concerning the residential mortgage meltdown. We all recall those geniuses back East who have tried to hold lenders responsible for the condition of abandoned homes they don’t even own and for other consequences of economic and social forces beyond any lender's control. When will voters wise up and kick these time wasters to the curb?
You’re right: when Hell freezes over.