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The plan to use eminent domain to seize troubled mortgages and write down debt for homeowners failed to garner public support.

By Alejandro Lazo, Los Angeles Times
January 24, 2013, 4:53 p.m.

San Bernardino County and two of its cities abandoned a plan that would use eminent domain to seize troubled mortgages and write down debt for homeowners.

The decision strikes a blow to an idea that garnered national attention as a potential — if unconventional and controversial — solution to the mortgage crisis.

The proposal was unanimously shot down in a vote by members of the Joint Powers Authority that the county and the cities, Ontario and Fontana, formed last year to explore the idea. Greg Devereaux, county chief executive and chair of the authority’s five-member board, said it gave up on the eminent domain plan because of its lack of public support.

Devereaux also echoed criticisms by the mortgage industry and Wall Street groups, who have argued such a plan would spark lawsuits, higher interest rates and a tightened market for borrowers.

“It introduced risk into the market that we couldn’t quantify,” Devereaux said. “It wasn’t a decision that a board like this should make unless there was overwhelming support in the community for going forward with that solution, and assuming that risk; that support never materialized.”

Eminent domain is usually used to seize land — not loans — to serve the public good, as when local governments seize blighted properties. The San Bernardino County effort would have been the first widespread attempt at using eminent domain to seize residential mortgages.

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