San Bernardino County in California and two of its biggest cities are working on a plan to use eminent domain to seize mortgages of certain underwater borrowers in an effort to help the homeowners. However, SIFMA is warning that doing so would raise problems in the "to-be-announced" mortgage-bond market. Allowing the mortgages to be seized would make them significantly different from other loans in the TBA market. "We have an obligation to address that, because they would no longer conform with the other mortgages," said SIFMA's Kenneth E. Bentsen Jr. "This creates a material event and we have to make the necessary arrangements." Learn more about letters sent by SIFMA, as part of a coalition, to the three California municipalities.
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