Roy Oppenheim’s commentary was originally published on Yahoo! Homes and is being redistributed on South Florida Law Blog with their permission.
Eminent domain, where the government can seize properties without an owner’s consent, is meant to be used for significant public benefit.
Usually when the government takes a home under eminent domain, it is expanding a road or building an airport.
Or it is using it to eradicate blight in urban areas.
But now we have a twist in which it is not the homes themselves but their mortgages that might be seized under eminent domain.
As you may have seen, a company called Mortgage Resolution Partners is suggesting that local municipalities use it to help keep people in their homes.
They are proposing that local governments use eminent domain to pry underwater mortgages away from the banks. MRP says that it would then assist these municipalities by structuring a more equitable loan, which could then be sold back to investors.
The people living in these homes would be allowed to continue to stay in their homes, under the terms of this new mortgage.
It’s a bold idea, one that’s not necessarily new, but one that’s finally getting some attention.
Officials in several counties in California are listening, including San Bernardino County, which is itself in bankruptcy.
And really, shouldn’t they be?
Whether you like this plan or not, and plenty in the real estate community do not, how can you rationally argue that preventing foreclosure isn’t the embodiment of a significant public benefit?
It is what eminent domain was made for.
Here’s the truth about the housing crisis. The solutions to fixing it are not coming from the crystal towers or Washington D.C. They are coming from the trenches, from the minds of entrepreneurs and local officials who actually have a stake in their communities and know what it’s like to go broke.
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