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Comment by ars | Hacker News Reader

Good luck to anyone ever getting a mortgage in that town ever again.

If you were foreclosed on over a year ago, and were able to prove it was due to economic hardship, you can get an FHA loan.

Disclaimer: Both my parents work in the mortgage underwriting business, one of them forcing BoA/Chase/Wells to take back th loans they made during the boom times.

EDIT: I'm a sport, here's a citation: http://www.calculatedriskblog.com/2013/09/wsj-fha-cuts-waiti...

http://online.wsj.com/article/SB1000142412788732398060457903...

Moreover, the property values there will go even lower because of dried up financing.

This could become a textbook case of government power abuse backfiring at the people the politicians claim to be "helping"

There is a better description of what this city did: Theft

That's one way to look at it. Another way is that they're fully bursting the real estate bubble that the entire nation's financial systems have furiously been forcing compressed air into for the last 5 years in the name of "preserving home values" even though normal people can't actually afford a home anymore.

While I agree with railing about bad decisions, it is almost willfully ignorant to continue to argue against settled law. This is as much theft as it was in Connecticut.

As much as I hate it, "Wickard vs Fillburn", and "Citizens United v. Federal Election Commission", "Gonzales v. Raich", and lastly "Kelo v. City of New London" ARE the laws of the land.

If the investment classes are going to be leveraging laws against homeowner to take property at 'current market prices'; how is it wrong for cities to force investor classes to do the same?

Change the laws, but don't decry the victims of fraud and systemic false market inflation turning the current laws against those who perpetuated the pump and dump scheme on them in the first place.

I think it will cost some financing issues/property costs, but then it will lead to the rise of a Community Trust bank or Credit Union. These are things that truly change communities.

If no one can get a mortgage there then house prices go to their cash only value, so one wouldn't need a mortgage to buy. So the good luck should go to anyone wishing to sell a house there

Or maybe lending standards will increase (ie, you won't be able to get a loan unless you can prove you are going to be able to pay it off), and valuations will be more conservative.

Neither are exactly a bad thing.

I think big banks will actually avoid the municipality like a plague for several years. But a community bank will rise and the locals will laugh.

Maybe.

But keep in mind that the world's best-regarded borrower is the German federal government, which has defaulted twice in the past century. Past returns do not predict future performance, as the prospectuses say.

They said the same thing about Iceland too :).

I think this is the real and telling part. Yes, they had to give up a 34mm bond sale because the top level bond market was refusing to buy. This is a short term problem caused by butt hurt bankers, not actual investor class bond buyers. The city is not actually defaulting on any real bonds, the bond investor class is not being hurt.

Yes it will cost more for 10 years until they can re-finance; but when the city offers a margin over market, actual people bond buyers will jump for the chance to make a % over market.

You want to bet there isn't a credit union in the entire city? That entire category had much fewer problems because they didn't write bad-to-fraudulent loans during the derivative party era and the recurring theme throughout this story is that Richmond has been unable to otherwise motivate the big banks to do their jobs – something which would not be true for a local/regional bank which wasn't grossly irresponsible.

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