California Lt. Gov. Gavin Newsom believes a plan under consideration by Inland Empire communities to seize and restructure troubled mortgages deserves a look. (Brian van der Brug / Los Angeles Times)
By Alejandro Lazo
July 27, 2012, 4:36 p.m.
One of California’s highest-ranking politicians, Lt. Gov. Gavin Newsom, has told an investor group to “back off” and allow San Bernardino County to explore a controversial plan that would employ its eminent domain powers to seize and restructure troubled mortgages.
The cities of Ontario and Fontana, in partnership with the county, are exploring using private funds to acquire mortgages that are “underwater” — that is, where the homes wouldn’t sell for enough money to pay off the loans. Under the proposed Homeownership Protection Program, the loans acquired by government authority would be restructured, lowering the amount owed, with the intent of helping the owner keep the home.
Newsom appears to be the highest-ranking California politician to speak out on the plan under consideration by the Southland communities. In an interview with The Times, he did not explicitly endorse the idea, although he said that releasing consumers from underwater mortgages would go far to help the state and national economies.
“We have got to be as bold as the problem is big,” Newsom said. Underwater homeowners are often “barely holding on and increasingly entering foreclosure.”
“This idea is bold. This idea is meaningful,” Newsom said.
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