The City of Chicago will hold a hearing to consider using eminent domain to seize underwater mortgages, HousingWire.com reported on Friday. The idea first came under consideration in San Bernardino County, Calif. Venture capital firm Mortgage Resolution Partners is pitching the idea to several cities across the country. Using investor dollars, local governments would seize performing mortgages in negative equity, reduce the principal for the borrower and refinance it into a government-backed loan. More than 44 percent of the homes in surrounding Cook County, Ill., are worth less than the mortgage. According to the Chicago, local homeowners lost more than $37 billion in equity since the housing market crashed.
For more on the challenges of cities using eminent domain to help underwater homeowners, make sure to listen to ABI's latest podcast: http://podcast.abi.org.