Professor proposes massive use of eminent domain as a solution to the mortgage crisis.
In a New York Times Editorial, a Yale Professor has advocated the use of eminent domain as a means of eliminating “underwater” mortgages. His article states that some form of collective action must be taken by holders of these mortgages to write them down so that homeowners will again owe less on a house than it is worth. The article cites to a theory proposed by another professor from Cornell University that such collective action can be forced by the use of eminent domain whereby the government forcibly buys out the interest of the mortgage and then resells them to public investors all at less than the amount of the original loans. At least one community (San Bernadino) is considering this tactic.
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