City’s Woes May Impede Bid to Seize Mortgages

American Banker

July 12, 2012

San Bernardino County is now considering a plan to use eminent domain to restructure mortgages that are underwater. If the proposed plan is enforced, many investors could face significant losses if their loans are seized. Michael A. Sweet discussed San Bernardino County’s financial situation with American Banker.

“The problem that San Bernardino and other cities have has to do with insufficient revenue to cover expenses…and most of that revenue is property-tax driven,” Sweet said. “If the plan cuts the underlying value of the real estate in the city…that would further reduce revenue, because it cuts the amount of property tax the city will be collecting.”