A Federalist Blessing in Disguise: From National Inaction to Local Action on Underwater Mortgages

24 Pages Posted: 18 Sep 2013  

Robert C. Hockett

Cornell University - Law School

John Vlahoplus

Independent

Date Written: September 16, 2013

Abstract

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

Suggested Citation

Hockett, Robert C. and Vlahoplus, John, A Federalist Blessing in Disguise: From National Inaction to Local Action on Underwater Mortgages (September 16, 2013). Harvard Law & Policy Review, Vol. 7, p. 253, 2013. Available at SSRN: https://ssrn.com/abstract=2326748

Robert C. Hockett (Contact Author)

Cornell University - Law School ( email )

Myron Taylor Hall
Cornell University
Ithaca, NY 14853-4901
United States

John Vlahoplus

Independent ( email )

No Address Available

Paper statistics

Downloads
76
Rank
261,954
Abstract Views
1,172