Start : Monday, December 03, 2012 01:00 PM
End : Monday, December 03, 2012 02:00 PM
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Communities across the nation are struggling with the prevalence of “underwater” mortgages. There are concerns that these mortgages are more likely to go into foreclosure or even be abandoned by their owners. Neighborhoods with an excess of foreclosed or abandoned homes can suffer still lower property value and blight. Cities and towns realize decreased tax revenues from such homes. Recently, proposals have surfaced to condemn these mortgages and pay the mortgage holders compensation equal to the fair market value of the underlying property. The governmental entity holding the mortgage would then rewrite the loan at the lower present value of the home, thus allowing the homeowner to remain in the home while paying off a less expensive mortgage.
The condemnation of underwater mortgages has generated fierce controversy. Questions have arisen over whether 1) the condemnation of underwater mortgages for the benefit of individual owners violates the public use clause, 2) whether the just compensation for the original mortgages taken can be fairly and easily calculated, and 3) whether the condemnation of such mortgages violates federal law, and 4) whether the condemnation of private mortgages will stifle future lending activity in the communities exercising the power of eminent domain.
- Mr. James S. Burling, Director of Litigation, Pacific Legal Foundation
- Mr. Richard Dorfman, Managing Director, Head of Securitisation Group, Securities Industry and Financial Markets Association
- Prof. Steven J. Eagle, Professor of Law, George Mason University School of Law
- Prof. Robert C. Hockett, Professor of Law, Cornell University Law School
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