Using Eminent Domain to Condemn Underwater Mortgages
Not the property itself — just the mortgage. Allow an underwater homeowner to keep his/her home by seizing the mortgage. YES. Eureka! (Or “Viola!” as Kellie Bundy used to say.)
Everybody wins — the homeowners themselves and jillions of neighborhoods that have been blighted with foreclosed/derelict buildings. And this doesn’t involve any tax dollars or government agencies. This idea is being pushed by a mortgage firm and a number of investors.
Mortgage Resolution Partners says condemning underwater mortgages and taking them out of the hands of private banks is “the only practical way to modify mortgages on a large enough scale to solve the housing crisis.”
We’ve tried everything else. Let’s give it a whirl.
Mortgage Resolution Partners is working with local governments to find investors who are willing to come up with the money to finance the condemnation process on a large scale. After taking possession of a mortgage, Mortgage Resolution Partners would restructure the loan, thereby reducing the monthly payments and allowing the homeowner to keep his/her home.
The chief executive of San Bernardino County (CA) said:
“We are intrigued. Our economy in this county can't be turned around until a large proportion of the mortgage crisis has been addressed.”
The chairman of Mortgage Resolution Partners said:
“The private sector provides all the financing and all the risk with this program. We have watched state and national government try to fix this and it hasn't worked.”
This sounds like the most hopeful approach yet.