More Municipalities Consider Eminent Domain to Fight Foreclosure


Irvington, New Jersey, is moving forward with plans to become the second municipality in the nation to use eminent domain to buy mortgages that are in foreclosure (see November 15 New York Times story).  Irvington will be performing a legal study of the proposal.  Since 2008, nearly 1,800 homes have been foreclosed in the city of 53,000.  It has an unemployment rate of 12.4 percent.  Even the New Jersey chapter of the ACLU backs the Irvington plan. 

Earlier this year, the City of Richmond (California) announced its plan to use eminent domain to help underwater homeowners.  There was strong opposition from banks and real estate groups regarding the plan and an action challenging Richmond’s plan was dismissed earlier this year because it was untimely – Richmond has not yet used eminent domain.  It is believed the same entities will file another lawsuit if and when Richmond actually uses eminent domain to actually buy a mortgage.

A number of other cities across the nation, including Newark and North Las Vegas, Nevada, have considered the idea of using eminent domain to buy subprime, underwater mortgages. The legality of the issue remains to be determined. 

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