Massive Loan Fraud In USDA Rural Housing Agency . . . $300 Million Loans Financed Ineligible Projects?

It seems that governmental efforts to save the underwater and ineligible homeowner from his own fate are reaching fever pitch. Not only do we hear today of the up to $ 300mm in Agriculture Department Rural Housing Service loans that may have financed ineligible projects or borrowers with a high potential inability to repay the loans; but yesterday’s WSJ reports on the growing call for ‘eminent-domain’ powers to be used by local government officials in California to stop the “housing bust’s public blight on their city”. In yet another get-out-of-jail-free card, the officials (helped by a friendly local hedge-fund / mortgage-provider) want to use the government’s ability to forcibly acquire property to remove underwater homes, restructure the mortgage (cut principal), and hand back the home to the previously unable to pay dilemma-ridden homeowner.