Another City Looks at Eminent Domain as Solution to Foreclosures
“Another city hard hit by the housing crisis has proposed exercising its power of eminent domain on behalf of its underwater homeowners. The City Council of Brockton, Massachusetts voted this week to commission a study into the feasibility of such a move, joining several municipalities in California and the City of Chicago which have already taken a look at such an undertaking.
Brockton, an old industrial city located south of Boston, has seen the median price of its housing drop from $260,000 to around $120,000 since the first quarter of 2007 and home sales during the same period drop by about a third. The proposed plan is designed to stabilize the housing market, curtail blight, and return homeowners to a positive equity situation. If adopted, the City would use eminent domain to take foreclosed properties (REO) from lenders and sell them to city residents and non-profit organizations. Under the plan the City could also seize underwater mortgages from the investors who hold them, restructuring them to reflect the value of the underlying collateral then reselling them to other investors at that new value.”
Swanson, Jann. Mortgage Daily News 14 January 2013