Eminent domain as a foreclosure fix
Property values have fallen so sharply in San Bernardino County that nearly half of the homeowners with mortgages owe more than their houses are worth. Hoping to aid at least some of those "underwater" borrowers, the county is considering a novel plan to use venture-capital dollars to buy and refinance their mortgages. The plan's authors say that homeowners would end up with less debt and the county and its financial backers would make a profit — all without the taxpayers spending a penny. The losers? Supporters say there would be none. We're not so sure.
The collapse of the housing bubble has led to wave after wave of foreclosures, driving housing values ever lower. Plummeting values, in turn, increase the risk that more borrowers will default because they can't sell their homes for what they owe.