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Eminent Domain Might Resolve Underwater Mortgages
Eminent Domain Might Resolve Underwater Mortgages

AIR DATE: March 13, 2013

Eminent domain usually means the state or the city forces you to sell your land back to the government for a government project - roads or parks. The government has to pay the market value. Now a group of investors is proposing that North Las Vegas use its power of eminent domain to buy up underwater mortgages at market prices in order refinance them at the real value of the house. But is it legal? And could it resolve the 63,000 mortgages in the Las Vegas Valley that are currently thought to be under water.
Byron Georgiou, Mortgage Resolution Partners
Steven Gluckstein, Mortgage Resolution Partners
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    Nearly everyone has lost money on bad investments; fundamentally, that is no different than having an underwater house. So, should the government make people whole on their bad investments? And just who should that money be taken from? By suggesting eminent domain here, one is saying that the government *should* make good on peoples' bad investments, and that that money (property value, in this case) should be taken from the bankers(who ironically were the ones who gave the money to the homeowners in the first place). That is *not* fair or just by any measure. Bottom line, eminent domain (forcible transfer of property from one person to another) is *always* a very bad idea. Indeed, the Founders called it "the despotic power" and sought to prohibit it.
    Tom HurstMar 6, 2013 19:49:54 PM
    I should mention that if the money is not extracted from the banks, it will instead be taken from taxpayers in one form or another. In that case, why should people who are not underwater pay for those who are? Personally, I didn't make this bad investment decision (paying too much for a house in an obvious property bubble), so shouldn't bail out those who *chose* to do so. If prices had gone up instead, would they be obligated or even inclined to share any of their profits with me? I think not.
    Tom HurstMar 6, 2013 19:55:53 PM
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