California County Drops Consideration Of Eminent Domain Proposal

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On January 24, a Joint Powers Authority established by San Bernardino County decided not to pursue a proposal under which the County would use eminent domain power to seize underwater mortgages from private trusts and provide principal reduction for the borrowers. In announcing the decision, the chairman of the Authority explained that the decision was based on warnings from experts about the destabilizing effect on the housing market such a policy would have, and noted that county residents did not favor the proposal. Instead, the Authority approved an agreement to work with banking, mortgage, real estate, and investment firms to connect homeowners with appropriate mortgage assistance programs. San Bernardino had been closely watched since it began pursuing the concept last year. Its decision could portend how other localities will proceed. At least one recent report indicates that several other localities that have been considering eminent domain proposals already were wary of the concept even before San Bernardino’s decision.

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