Using Eminent Domain as a tool for resetting mortgages, preserving homeownership, and aiding local economies

The housing crisis has devastated families, communities and the economy.

9 million families have lost their homes to foreclosures, Americans have lost 40% of their average household wealth, and the crisis continues!

Help for struggling homeowners and communities, either from the federal government or from the banks, has been limited at best. The solution called for by Home Defenders League and many economists and leaders– to broadly reduce mortgage principal for underwater homeowners – has been resisted by the banks, blocked by Fannie Mae and Freddie Mac and prevented, in some cases, by loan servicing agreements.

Tired of waiting on the banks or the federal government to start cleaning up the mess that Wall Street caused, community groups, civic leaders, and elected officials are taking action locally by developing programs that use eminent domain to reset mortgages, preserve homeownership, and aid local economies.

Using eminent domain, a public authority can take mortgages out of the complicated structures they are trapped in, pay fair market value for them, and create the conditions for new sustainable mortgages at current home values to be written—all while borrowers stay in their homes. This can be done at scale, on a city-by-city basis.

Eminent domain has often been used in ways that have been harmful to our communities. This is a way to use this law to the tremendous benefit of our communities – to keep more families in their homes! Wall Street banks are scared of this and they are threatening to stop lending in communities that use eminent domain to address the underwater crisis.

Join the growing list of community leaders, cities and towns that are supporting this solution.

• Sign on to the Statement of Principles.

• Pass a simple, common sense resolution about achieving principal reduction for underwater homeowners. The resolution would simply say that:

The City Council directs staff to explore all legal options at the City’s disposal to reset mortgages to fair market value in order to prevent foreclosures and stabilize the housing market, including the use of eminent domain to acquire underwater mortgages and write down the principal on those loans.