There are definitely options

Mortgages

No, this isn't an ad for mortgage companies, or cheap home loans. When the economic collapse hit in 2007 and 2008, one of the biggest problems is that many homeowners found that the value of their homes was less than they owed on their mortgages.

Many walked, many didn't.

But many folks are still "under water." The banks refused to reduce the amounts due on their mortgages and as a result more people walked away from their homes than would have otherwise. These were called "strategic defaults."

What the banks didn't do, didn't have to be the end of the story.

The city of Richmond, California has decided to take action. They have exercised the right of eminent domain to take possession of all the mortgages on homes in their city. I'll explain that in a moment, but in brief it means the city government took the mortgages from the banks but the city is required to pay the banks fair market value.

What's fair market value? The value of the homes. The city will then be the lender and homeowners will make their payments to the city.

Eminent domain has existed since before the U.S. was a country, but it was formalized in our Constitution's 5th Amendment (which is also the one dealing with the right to not incriminate yourself in testimony). The government can take property, but it's obligated to give fair value for that property. The taking has to be for a government purpose (rather than revenge or some other petty motive).

The city has already won the first court battle against the banks, who sued after the taking of the mortgages, and the case is now under appeal.

But it's interesting at the very least.

The "taking" is clearly a government purpose. The city has an interest in keeping homeowners in their homes to avoid urban blight (see pictures of Detroit, for example). The payment of fair value is a bit tougher to figure out, but one way of assessing value is what the bank would get for the property if the mortgage was defaulted on (the homeowner stopped paying) and the bank was forced to sell the property. Clearly it couldn't get more than the value of the home, so the argument is that the value of the home is the fair value of the mortgage.

The arguments against that last position,  go two ways. On the one hand if many of the mortgages suffered a default, the value of the homes could be significantly less than the current market value, and even if the defaulted mortgages only numbered a few, when someone's going to default on their mortgage loan, they generally don't maintain the property as well as someone who's going to stay, so again, the value could be less.

On the other hand, it could be greater. If the homeowner stays, the value of the mortgage is the loan plus interest for the length of the loan. Clearly the banks' position is that most people will stay in their homes and pay the total amount of the mortgage.

The real value, in my opinion, of what the city's done, is that if the banks lose all their appeals, at the very least, they should be ready to come to the bargaining table so they can keep their mortgages and collect interest, which they'd only be able to do by reducing the mortgage to current value, or perhaps a bit more.

Stay tuned on this one.

Trivia Questions

The answers will appear below, so you don't have to look at the answers until you're ready.

1. Who wrote Ulysses Grant's autobiography?

2. Speaking of writers, who was the first writer to submit a novel to his publisher after typing it (on a typewriter, as contrasted with sending it in, in handwriting)?

3. Spiro Agnew, of course, resigned in disgrace. What vice president was charged with murder?

4. Richard Nixon ran for president the first time in 1960 and lost. Who was Nixon's running mate?

5. Members of the U.S. Senate are elected directly, by the people of their state, but it wasn't always like that. Before a constitutional amendment mandating direct election, how were U.S. senators chosen?

The Big Show

This Wednesday evening (program starts 9:00 PM Eastern Time), we'll be talking with author JT Sather. He recently wrote a very funny piece about almost being charged with kidnapping. While I know it's hard to believe that could be funny, it is, so please give a listen at http://GoingBeyondRadio.com

If you're reading this after Wednesday (11/6/13), you can still hear the show as it was recorded at the same address, with the addition of a slash and my name: http://GoingBeyondRadio.com/JeffBushman

You can also hear our earlier shows at the same location. The following week we interview Larry Hancock, the author of "Someone Would Have Talked," among other works. That book was about the JFK killing and Larry's joining us in observance of the 50th anniversary of that assassination. The following week, he heads to Dallas. If you listen to the show, you can also call in and ask Larry your questions.

Books

I want first, to recommend a very good book to you. Miracle Cure was written by Harlan Coben, before we had the drugs we have today, so it's a bit dated, but it's a really good mystery novel with a lot of twists. I think you'll enjoy it. Obviously, because of its age, you can find it at a library, a used book store, or on Amazon.com. It's worth the read.

...And Speaking of Books

Let me tell you about mine and where to find them. But first, let me talk to you about Amazon.com. If you want to order anything from Amazon, please go to the top of our page and click anywhere on the Amazon banner. It doesn't matter where, because if you go to Amazon from our page, even if you click on books and buy cosmetics, or vice versa, we get some credit for it. It won't cost you anything, and we'll get a couple of kopeks.

But, about my books -


Mobile Millionaire is a guide book to mobile home investment. Amusing Sex, Funny Sex is a compilation of some of the columns I've written for Scottsdale Health Magazine, and Bobby's Been Shot is a mystery novel.

Mobile Millionaire: http://www.amazon.com/The-Mobile-Millionaire-ebook/dp/B003Y3BQCG/ref=sr_1_4?ie=UTF8&qid=1335109195&sr=8-4

Amusing Sex: http://www.amazon.com/Amusing-Sex-Funny-ebook/dp/B007UJ665C/ref=sr_1_3?ie=UTF8&qid=1335109195&sr=8-3

Bobby's Been Shot!: http://www.amazon.com/Bobbys-Been-Shot-ebook/dp/B008V5NIGE/ref=sr_1_2?s=digital-text&ie=UTF8&qid=1344916520&sr=1-2

Acne Cure: http://www.amazon.com/The-Cure-For-Acne-ebook/dp/B007QI4YLK/ref=sr_1_1?ie=UTF8&qid=1335109195&sr=8-1


Trivia Answers

1. The obvious answer is wrong, though he is buried in Grant's Tomb. Though he told his story to the author, the actual writer was Mark Twain.

2. If you didn't cheat, you may have guessed. It's the same answer - Mark Twain, but the next several answers won't be Mark Twain.

3. Aaron Burr. He was Jefferson's veep and he killed Alexander Hamilton in a duel, after dueling had already become illegal (and very messy). Also, as far as we know, Burr had nothing in common with Mark Twain.

4. Henry Cabot Lodge. Lodge was from Massachusetts as was the man who defeated Nixon, JFK. Kennedy had beaten Lodge for the Senate seat that ultimately put Kennedy in position to run for president.

5. By an election by the state legislatures. The change was thought to make members of the Senate more responsive to the desires of their constituents.

Final Words

If you're still reading this, thanks very much and please listen to the radio program. We're aiming towards doing some additional programs and we'll announce that here and at our other blog, http://JeffOnRadio.blogspot.com but in the meantime, we'll see you on the radio.