A few months ago, mortgage investors believed the idea of using eminent domain to help underwater borrowers was dead. Fast-forward a few months, and it seems several communities are saying otherwise.
The Wall Street Journal has more on the resurgence of the eminent domain concept and the cities considering it on the West.
The fight over using eminent domain to prevent foreclosures is on again. Wall Street banks crushed an effort earlier this year by California's San Bernardino County supervisors—in a community devastated by foreclosures and collapsing home values—with threats of ruinously expensive litigation and a lending boycott.Sponsor Content
Despite the bullying, the anti-foreclosure idea has been explored by a number of cities, including North Las Vegas and El Monte, a suburb of Los Angeles. The tactic is simple: Municipalities buy mortgages that are likely to end up in foreclosure and negotiate new mortgages that homeowners can afford.