City’s Fix for Mortgage Crisis: Seizing Home Loans by Eminent Domain
Sheree R. Currey | AOL | August 1, 2013 | link
Doris Ducre of Richmond, Calif., is like millions of other homeowners in this country. She works a 9-to-5 job. She pays her bills. She’s current on her mortgage. But Ducre (pictured above) feels like a renter in her own home because she’s not gaining equity. “My home is underwater,” she tells AOL Real Estate.
The four-bedroom, two-bath ranch-style home that this laboratory technician’s family purchased for $300,000 in 1998 is now worth about half its value, she estimates. The same goes for many of her neighbors in this 33-square-mile town just outside of San Francisco. About 49 percent of Richmond homeowners with a mortgage have a dwelling that’s worth less than the mortgage owed on it. City data reveals that more than 78 percent of the housing units have mortgages.
Officials in Richmond say that situation is untenable and want to seize about 620 underwater mortgages under eminent domain and give them back to the homeowners at a reasonable value. The program’s intent is to help homeowners like Ducre — and like Rodney Conway, who bought his home in 2004 for $340,000 and says that it’s now worth about $140,000. Richmond is the first city to adopt such a plan using eminent domain, a law that typically allows government to seize land for public use — such as when it wants to expand a road or allow for a commuter rail line to pass through town. Other local governments have considered it, though, most notably San Bernardino County in Southern California, where a proposal for it was ultimately rejected early this year.