San Bernardino’s Joint Powers Authority rejected the county’s reverse eminent domain proposal. However, San Bernardino continues to consult with private contractors to find alternative solutions to its homeowners’ negative-equity burden.
San Bernardino originally introduced its reverse eminent domain proposal in 2012. Its aim was to modify mortgages for underwater homeowners by using eminent domain in an unorthodox way—to seize mortgages rather than real estate.
The county’s plan was simple:
- “condemn” mortgages;
- pay market value for the mortgages taken;
- cut the loan principal balance;
- reduce interest and payments on the note; and
- keep families in their homes.
Mortgage Resolution Partners, who developed the reverse eminent domain idea, is considering similar proposals with 30 other cities nationwide. The company is confident at least one of those cities will execute the plan.
first tuesday insight
Rarely do government authorities embrace “unprecedented,” “novel,” “untraditional” and “revolutionary” proposals.
Local media pundits labeled San Bernardino’s proposal with every one of these monikers. The idea is pretty radical. But so is the economic weight of negative equity crushing the county.
Reverse eminent domain’s potential benefits reach beyond individual debt relief. The action would stimulate the lethargic housing recovery and strengthen the rest of the economy.
Reverse eminent domain may not have a future in San Bernardino, but other parts of the nation may take a chance on the idea. Until then, underwater homeowners uninformed or unwilling to short sell or walk away will have to keep treading water.
Re: “San Bernardino County abandons eminent domain mortgage plan” from The Los Angeles Times
the “banks” will never allow this
you have to remember who works for who