A Federalist Blessing in Disguise: From National Inaction to Local Action on Underwater Mortgages
24 Pages Posted: 18 Sep 2013
Date Written: September 16, 2013
While it is widely recognized that the mortgage debt overhang left by the housing price bubble and bust continues to operate as the principal drag upon U.S. macroeconomic recovery, few seem to appreciate just how locally concentrated the problem is. This paper takes the measure of the national mortgage debt overhang problem as a cluster of local problems warranting local action. It then elaborates on one form of such action that the localized nature of the ongoing mortgage crisis justifies - use of municipal eminent domain authority to purchase underwater loans, then modify them in a manner that benefits debtors, creditors, and their communities alike.
Keywords: Condemnation, Debt, Deflation, Debt-Deflation, Eminent Domain, Foreclosure, Mortgage-Backed Securities, Mortgages, Mortgage Crisis, Private Label Securitization, Real Estate, Real Estate Crisis, Securitization, Securitized Lending
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