It’s no secret that the U.S. economy remains in critical condition. Florida, along with several other states, suffered more than most during the recession, and Florida continues to suffer. Florida’s economic woes stem, in part, from the “foreclosure crisis” caused by people taking on more debt than they could afford when buying homes. According to the August 9, 2012 edition of Gulfshore Business Daily, Florida had the nation’s third-highest foreclosure rate in July 2012. As reported by CNN, in some California communities, the unusually large number of foreclosures over the last few years has resulted in vacant homes, declining property values, and the corresponding loss of property tax revenues. The same holds true here in Florida and, in the absence of a replacement revenue source, local governments dependent on property tax revenues have had to cut costs and services to try to meet budgets. Faced with this situation, local governments in several parts of the country are considering the use of an unorthodox tool to solve the problems caused by “underwater” mortgages and homes — eminent domain.
It came from California…
Many people are familiar with the use of eminent domain to acquire private property for public use, such as the widening of a public road. The Wall Street Journal reported that San Bernardino County and two other California communities are considering the use of eminent domain to acquire home loans that are current, but “underwater.” (A home or loan is “underwater” if the amount owed exceeds the value of the home serving as collateral.) The City of Chicago, Illinois, and Suffolk County, New York have also considered use of eminent domain in this manner, though on August 14, 2012 Chicago’s mayor, Rahm Emanuel, announced his opposition.
How would it work?