Abstract

http://ssrn.com/abstract=2261839
 
 

Citations (1)



 


 



Protecting Status: The Mortgage Crisis, Eminent Domain, and the Ethic of Homeownership


Rachel D. Godsil


Seton Hall University - School of Law

David Simunovich


Seton Hall University - School of Law

December 7, 2008

Fordham Law Review, Vol. 77, No. 3, 2008
Seton Hall Public Law Research Paper No. 2261839

Abstract:     
Homeownership is in crisis. Millions of families are at risk of foreclosure as they are caught between declining housing values and rising interest payments on adjustable-rate mortgages. The primary concern for such families is not that they will become homeless - most families who lose their homes could afford to become renters - but rather that they will lose their status as homeowners. For families required to sell their property by the government's use of eminent domain, a similar issue arises, as the 'fair market value' of some homes (the standard measure of compensation) is generally not enough to allow the family to purchase another home. The harm of losing one's status as homeowner has afar-reaching impact at both the individual and collective levels. Property ownership ties one to the larger community in myriad ways. As compared to renters, homeowners - even those with the same income, education, and other socioeconomic characteristics - tend to be more civically active and more apt to engage in market transactions linked to their homes. Losing this link to the larger market and community will harm a family's long-term prospects. When many families lose these connections, whole communities suffer.

The link between the mortgage crisis and the full-scale financial meltdown has led to bipartisan support for a degree of government intervention unseen since the Great Depression. In this Article, we explore why homeownership is so highly valued-and whether the loss of homeownership status should impel government action. We conclude that this loss does warrant government intervention - but also argue that the myopic focus on homeownership absent an adequate regulatory regime and a broader economic agenda has had dire effects. The families caught by the subprime mortgage debacle were often targeted by predatory lenders because of their membership in vulnerable groups. The government's failure to prevent this exploitative behavior then requires its intervention now. However, it is crucial to ensure that government intervention does not create insurmountable barriers to entry for aspiring homeowners or moral hazard. Accordingly, our status-preservationist approach would protect only those who would have received loans had sound lending practices been utilized and would counsel against the view that homeownership alone is adequate to ensure healthy communities. Rather, homeownership has in the past been linked to behaviors that create sound communities. In the context of eminent domain, the argument for status preservation is even stronger, as it is justified by the U.S. Supreme Court's maxim that compensation should be based on fair market value unless doing so 'would result in manifest injustice to owner or public.' We conclude by considering the broader implications of the economic meltdown and reflect on whether it has so permanently altered our conception of homeownership that homeowner status is in the process of losing its value.

Number of Pages in PDF File: 53

Accepted Paper Series


Download This Paper

Date posted: May 8, 2013  

Suggested Citation

Godsil, Rachel D. and Simunovich, David, Protecting Status: The Mortgage Crisis, Eminent Domain, and the Ethic of Homeownership (December 7, 2008). Fordham Law Review, Vol. 77, No. 3, 2008; Seton Hall Public Law Research Paper No. 2261839. Available at SSRN: http://ssrn.com/abstract=2261839

Contact Information

Rachel D. Godsil (Contact Author)
Seton Hall University - School of Law ( email )
One Newark Center
Newark, NJ 07102-5210
United States
David Simunovich
Seton Hall University - School of Law ( email )
One Newark Center
Newark, NJ 07102-5210
United States
Feedback to SSRN


Paper statistics
Abstract Views: 125
Downloads: 13
Citations:  1

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.296 seconds