Brockton officials cautiously eye eminent domain for underwater mortgages
“The Brockton City Council recently launched a series of hearings and meetings investigating a proposal to seize underwater mortgages – loans with balances that exceed the current value of the homes they’re tied to. CommonWealth’s winter issue detailed the proposal, versions of which are being debated across the country. Municipalities normally employ eminent domain to take real estate. But as housing values have plummeted and foreclosures have piled up, housing advocates in hard-hit areas have pushed the idea of using eminent domain to take underwater mortgages from banks and investors. The mortgage-takings would be priced at market value for the homes, reducing the amount homeowners owe and handing sizable losses to the mortgages’ original holders.
San Bernardino County, the hard-hit California county that was the most prominent advocate of mortgage eminent domain, recently abandoned the idea. Eminent domain remains an intriguing proposal in Brockton, though, because the city’s foreclosure-scarred housing market has yet to see the recovery now taking hold in other corners of the state. The housing crash has paralyzed the market in Brockton, warding off investment and leaving homeowners making sizable monthly payments on homes they have zero equity in.”
McMorrow, Paul. CommonWealth Magazine 27 February 2013.