Paying Paul and robbing no one: an eminent domain solution for underwater mortgage debt

Robert Hockett

Current Issues in Economics and Finance, 2013, vol. 19, issue Jun

Abstract: In the view of many analysts, the best way to assist ?underwater? homeowners?those who owe more on their mortgages than their houses are worth?is to reduce the principal on their home loans. Yet in the case of privately securitized mortgages, such write-downs are almost impossible to carry out, since loan modifications on the scale necessitated by the housing market crash would require collective action by a multitude of geographically dispersed security holders. The solution, this study suggests, is for state and municipal governments to use their eminent domain powers to buy up and restructure underwater mortgages, thereby sidestepping the need to coordinate action across large numbers of security holders.

Keywords: Municipal finance; Mortgages; state finances; Securities (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci19-5.pdf (application/pdf)
https://www.newyorkfed.org/medialibrary/media/rese ... t_issues/ci19-5.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednci:y:2013:i:jun:n:v.19no.5

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Current Issues in Economics and Finance from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().