This morning at the ALI-CLE Eminent Domain and Land Valuation Conference, we made a presentation (along with Cornell lawprof Robert Hockett and moderator Jim Burling) on the issue of the use of eminent domain to seize "underwater" mortgages.
Late breaking: it must have been something we said - the Joint Powers Authority (the agency formed by San Bernardino County and two county municipalities to study the issue) today announced it would not use eminent domain to take underwater mortgages, noting that "the group decided to give up on the idea due to a lack of public support. 'We are taking that off the table,' [the chief executive and chairman of the JPA] said Thursday."
Here's the video we mentioned, an interview with the chairman of Mortgage Resolution Partners for the views from the outfit that stands to benefit from the use of using eminent domain to take underwater mortgages. Our comments on the video here.
Here are some of the materials we mentioned in today's session, including Professor Hockett's article that serves as the intellectual heart of the takings argument:
- Professor Hockett's article - It Takes a Village: Municipal Condemnation Proceedings and Public/Private Partnerships for Mortgage Loan Modification, Value Preservation, and Local Economic Recovery
- Richard Epstein's response (in which he labels the article "incredibly tedious and self-important" - his words, not ours!) - More Nonsense on the Home Mortgage Front: Don't Let Municipal Governments Condemn Mortgages at Bargain Rates
- The cert petition and amicus brief in a case asking the Supreme Court to clear up the "extreme confusion" regarding the rules for pretextual takings post-Kelo.
- Rick Rayl's thoughts on the reports that San Bernardino County has backed off of the plan to take mortgages, via California Eminent Domain Report.
- Eminent Domain is Bad Ploy for Underwater Mortgages (Steven Greenhut, via Bloomberg)
- Lawprof Stephen Bainbridge: California's plan to take mortgages by eminent domain--Where's the Tea Party when you need it?
- "Hey Look, Free Money!" Fed Agency Has Problems With The Plan To Take Underwater Mortgages (our comments on the issue from August 2012, at American Banker).
- Felix Salmon at Reuters: Why using eminent domain for liens is a bad idea.
- Eminent domain for mortgages - Brockton, other cities consider novel idea - via CommonWealth Magazine
- Municipalities Look at Eminent Domain to Revive House Sales and related video of a panel discussion from C-SPAN.
- The website of "Providing Local Solutions for Communities," a "public, private and not-for-profit coalition working to help save communities through direct local action, promoting new solutions to the housing crisis, helping communities and ensuring American families stay in their homes." In other words, the folks who are going to benefit financially if this eminent domain plan goes forward somewhere.
- No Wonder Eminent Domain Mortgage Seizures Scare Wall Street- via American Banker.
- From Mother Jones: Inside the Radical Plan to Fight Foreclosures With Eminent Domain.
As noted in the L.A. Times story above, San Bernardino County declining to undertake the plan is not the last word by any means:Steven Gluckstern, chairman of Mortgage Resolution Partners, said in an interview that he was disappointed by the board’s decision. But he added that his group was in discussions with more than 30 other jurisdictions across the country and he was confident that one of them would probably enact the plan during the first three months of this year.
We'll keep following this issue, since it appears that MRP has not given up the fight.