Counties taking refinancing into their own hands

 

BY NICK TIMIRAOS

A bond-investor group is suggesting rules that would make it difficult for banks to provide the lowest-cost mortgages to homeowners in cities that plan to use eminent domain to modify mortgages.

In a draft of the rules circulating among members, the Securities Industry and Financial Markets Association has proposed preventing home loans in those communities from being bundled into the most commonly used—and cheapest—pools of mortgage-backed securities.

This year, California's San Bernardino County and two of its largest cities, Ontario and Fontana, created an entity charged with restructuring mortgages for certain borrowers who owe more than their homes are worth. ...