Professor Robert C. Hockett has been exploring the idea of using eminent domain as a way to relieve underwater mortgages in several of his recent publications. The research is more than just theory, as the city of Richmond, California took steps this summer to put such a plan into action, while several other municipalities are exploring the idea as well.
The Scholarship@Cornell Law repository is featuring one of Professor Hockett's recent publications on this topic titled: "A Federalist Blessing in Disguise: From National Inaction to Local Action on Underwater Mortgages", originally appearing in the Harvard Law and Policy Review earlier this year and co-authored with John Vlahoplus of the advisory firm Mortgage Resolution Partners.
The abstract describes the paper as:
Taking "the measure of the national mortgage debt overhang problem as a cluster of local problems warranting local action. It then elaborates on one form of such action that the localized nature of the ongoing mortgage crisis justifies - use of municipal eminent domain authority to purchase underwater loans, then modify them in a manner that benefits debtors, creditors, and their communities alike."
For more on the latest scholarly articles from Professor Hockett and the rest of the law school faculty visit the repository at Scholarship@Cornell Law.