Inside the Radical Plan to Fight Foreclosures With Eminent Domain
“That’s where Gluckstern’s firm, Mortgage Resolution Partners, enters. It would arrange the funding for these eminent-domain purchases and then help a city like Merced reduce the loans’ principal and resell them to new investors, who’d cover the city’s costs and MRP’s brokerage fee.
Politicians are understandably reluctant to resort to what is essentially the nuclear option for rescuing beleaguered homeowners. In August, the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, posted a notice expressing its “significant concerns about the use of eminent domain to revise existing financial contracts.” In September, the Securities Industry and Financial Markets Association warned that any city that seizes a loan will face a crippling legal battle as well as a “chilling effect” as banks hike interest rates or pull up stakes entirely.”
Harkinson, Josh. Mother Jones 2 January 2012.