The fight over using eminent domain to prevent foreclosures is on again. Wall Street banks crushed an effort earlier this year by California’s San Bernardino County supervisors—in a community devastated by foreclosures and collapsing home values—with threats of ruinously expensive litigation and a lending boycott.
Despite the bullying, the anti-foreclosure idea has been explored by a number of cities, including North Las Vegas and El Monte, a suburb of Los Angeles. The tactic is simple: Municipalities buy mortgages that are likely to end up in foreclosure and negotiate new mortgages that homeowners can afford.
The above excerpt was originally published in The Wall Street Journal.
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