"Gluckstern had an interesting idea: Authorities would seize home
loans -- crucially, not the properties themselves -- that fit a defined
set of characteristics: underwater, held in private trusts and still
current, meaning that homeowners were still making monthly mortgage
payments. The local government would then forgive all of the debt in
excess of what the home was worth and help homeowners refinance at a
new, lower value.
The pension and institutional investment funds that actually own
these loans would get paid fair market value. Mortgage Resolution
Partners would pocket a $4,500 fee per loan for fronting the money to
make the purchase. Homeowners would gain a new incentive to invest in
repairs and upgrades to their homes, and gain hundreds of dollars each
month to spend on the local economy.
The plan could be customized to fit the needs of the local community, Gluckstern said."
I'm not sure what to think of this. It's a bold plan. It may be a misuse of eminent domain. But on the other hand, it may be the only hope many homeowners have for saving their homes. The federal government quickly bailed out the very banks that caused the problem in the first place, but not much has been done for the homeowner victims of others' greed. So I look forward to seeing how this pans out.