There is no question that many Worcester families have been hit with the overwhelmingly hard realities of foreclosure. As previously discussed on this blog, the community has formed groups and proposed anti-foreclosure measures specifically aimed at keeping local families in their homes. Other communities around the country have tried similar methods of stopping foreclosures and a few have even employed their municipalities' property reclamation authority to win the battle.
Communities outside of Massachusetts have started to use eminent domain to counteract the foreclosure crises occurring in their towns. Eminent domain is the right of a government to take real estate from a private owner and to use that property for a public purpose. Communities using eminent domain to fight foreclosure effectively get around mortgage contracts by paying down bonds before giving those bonds back. This practice has drawn the ire of many financial groups.
Eminent domain only seems to be occurring against mortgages that are not backed by the federal government and therefore the practice makes investing in such private mortgage bonds highly speculative. Investors may fear that their ventures will be circumvented by municipalities that pay down mortgage values to keep their residents in their homes.
Others in the financial field wonder if it is possible to stop this practice from infiltrating other financial arenas, such as the credit card market. While the process seems controversial on several levels, two communities in the United States have adopted the practice and one town in Massachusetts is weighing the possibility of implementing it as well.
Clearly many communities are concerned with the problems of foreclosure and some are looking at unique ways of counteracting the process. Individuals who are currently facing foreclosure may consider speaking with a real estate professional in the legal field to better understand their options for staying in their homes.
Source: Boston.com, "Eminent domain to fight foreclosures is divisive," Katie Zezima, Nov. 23, 2013