Joe Nelson, Staff Writer
Posted: 08/27/2012 06:47:51 PM PDT

San Bernardino County Supervisor Janice Rutherford is ramping up her opposition to a controversial proposal that would have the county partner with a private firm and use eminent domain to seize underwater mortgages to stimulate the housing market.

She said she is most concerned about the “unintended consequences” of such an action, such as banks possibly becoming less willing to lend to homebuyers if government is cherry-picking loans from underwater homeowners.

“The abuses of eminent domain are too plentiful and fresh for those of us who value property rights to swallow assurances that its use in this context would be limited,” Rutherford wrote in an editorial last week for the conservative blog Flashreport.

San Bernardino County, with roughly 150,000 of its residents underwater on their mortgages, is among the hardest hit in the nation since the subprime mortgage crisis hit in 2007. It is seriously considering the proposal by San Francisco-based Mortgage Resolution Partners that, if implemented, would be the first time eminent domain would be used for such a purpose.

Eminent domain is typically used by government to seize private property, at fair market value and through court order, for redevelopment or large-scale infrastructure projects.

The idea has sparked pushback from the financial industry, which has warned that government action to seize property through such a plan would hurt the housing market.

Rutherford was the first county supervisor to voice opposition to the plan in June, when the Board of Supervisors approved a joint-powers authority with the cities of Ontario and Fontana to examine options for assisting homeowners with negative equity and facing foreclosure.

“If the (joint-powers authority) continues down this path and starts trying to implement eminent domain, I will be an incredibly outspoken opponent of it,” Rutherford said. “But we’re a long way from that, and I don’t think the JPA would support that unless the public supports it.”

County Chief Executive Officer Greg Devereaux has said no program will be implemented until it is properly vetted and supported by the public.

To read entire story, click here.