Brockton eminent domain group has packed to-do list
“Using eminent domain to seize mortgage notes, which contractually bind residents to pay back homeowner loans, would be a novel but legal use of government authority, according to group members.
“We all think of eminent domain as grabbing another person’s property to expand a road,” said Grace Ross, a group member and the coordinator of Massachusetts Association Against Predatory Lending.
Ideally, the city would use its power of eminent domain to take the mortgage note of a resident in need of refinancing from a national bank and transfer it to a lender interested in helping the resident refinance the loan, preventing possible foreclosure. The effort could potentially improve the housing market in a city that routinely leads the state in having the most distressed properties per capita.
But while the group agrees the new way of using eminent domain would stand up to legal challenges, it has to consider multiple aspects of how to put the strategy into place, including:
Choosing which mortgages to target
Choosing which homeowners should be helped
Finding financing for compensating the banks holding the mortgages
Finding homeowners eligible for state and national refinancing programs
Deciding how much to compensate the national banks that hold the mortgages, which in many cases are more than the house is worth
“Either the law is going to be on our side or it’s not,” Ross said of the strategy. “The argument comes over valid fair market value for a mortgage.”
Ross prepared a working paper for the group’s first meeting and estimated that the city could target about 2,300 mortgages that are tied to national banks that packaged the mortgage debt in complicated financial deals.”
Bloom, Alex. The Enterprise 20 February 2013.