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The Price of Crisis: Eminent Domain, Local Governments, and the Value of Underwater Mortgages

Brescia, Raymond H. and Martin, Nicholas M., The Price of Crisis: Eminent Domain, Local Governments, and the Value of Underwater Mortgages (September 19, 2014). Temple Political & Civil Rights Law Review, Vol. 24, 2014, Forthcoming. Available for download at SSRN:

“Governments at all levels in the U.S. have deployed a range of tactics to address some of the most pernicious effects of the Financial Crisis of 2008: namely, a loss of trillions in homeowner equity as well as the growth of the prevalence of underwater mortgages, where the outstanding principals on the mortgages exceed the value of the underlying properties. Among other tactics for addressing such impacts, local governments have begun to explore whether it is wise and legal to use the power of eminent domain to seize distressed home mortgages. This Article attempts to situate this approach to such mortgages within the larger economic, legal and policy context to determine whether this approach has a sound basis in law and policy. To do this, we deploy the tools of Comparative Institutional Analysis to assess the potential viability of using eminent domain to seize underwater mortgages. In doing so, we review the wide-ranging efforts of governments at all levels in the United States to deal with the economic effects of the Financial Crisis of 2008. We look at the relative success of these different tactics used by these governmental entities — from ex ante regulatory approaches to ex post law enforcement and civil litigation strategies — to assess the most effective tools available to remedy the economic and social problems posed by distressed mortgages. We then determine whether the use of eminent domain by localities is consistent with those governmental responses to the fallout of the Financial Crisis that have proven effective in responding to some of its worst impacts: here, the loss of homeowners’ equity in their homes and the prevalence of underwater mortgages. In carrying out this analysis we ask, and attempt to answer, five key questions. First, are local governments appropriate actors to address the lingering problem of underwater mortgages? Second, what has been the relative success of the range of tactics that governments at all levels have used to address underwater mortgages, including law enforcement strategies and legislative and regulatory measures? Third, assuming local governments are appropriate actors to address this problem, how should localities and, if necessary, courts, value underwater mortgages in the context of condemnation proceedings: i.e., what is the appropriate amount of compensation that localities should pay mortgagees and other lienholders when seizing underwater mortgages? Fourth, what are some strategies local governments can use to find the resources necessary to finance a program that would seize underwater mortgages and, in effect, purchase them from mortgage holders? Finally, what are some potential down-side risks to local governments taking these actions? This review concludes not only that local governments are appropriate actors to address underwater mortgages, but also that ex post legal tools — such as eminent domain — are appropriate and effective techniques to use to address the fallout from the Financial Crisis of 2008, particularly its impact on homeowners. It also finds that the just compensation due holders of distressed, underwater mortgages, should governments seek to seize them by eminent domain, should be roughly sixty percent of the unpaid principal balance on those mortgages.”

NOAA Global Analysis of Land and Ocean Temperatures – August 2014

NOAA: “The combined average temperature across global land and ocean surfaces for August 2014 was record high for the month, at 0.75°C (1.35°F) above the 20th century average of 15.6°C (60.1°F), topping the previous record set in 1998. The global land surface temperature was 0.99°C (1.78°F) above the 20thcentury average of 13.8°C (56.9°F), the second highestContinue Reading

Introducing Structured Snippets, now a part of Google Web Search

Google Research Blog: “Google Web Search has evolved in recent years with a host of features powered by the Knowledge Graph and other data sources to provide users with highly structured and relevant data. Structured Snippets is a new feature that incorporates facts into individual result snippets in Web Search. As seen in the example below, interestingContinue Reading

New EEOC Report Identifies Common Errors by Federal Agencies in Dismissing Discrimination Complaints on Procedural Grounds

News release: “As part of its continuing efforts to improve the federal sector complaint process, the U.S. Equal Employment Opportunity Commission (EEOC) today released a new report, Preserving Access to the Legal System: Common Errors by Federal Agencies in Dismissing Complaints of Discrimination on Procedural Grounds. In the equal employment opportunity (EEO) process for federal employees andContinue Reading

Left Behind: The Long-term Unemployed Struggle in an Improving Economy

“A new John J. Heldrich Center for Workforce Development at Rutgers University analysis of unemployed and long-term unemployed Americans reveals the profound struggles of Americans who remained jobless for months and years even as the economy gradually recovers. The survey reveals that more than 7 in 10 the long-term unemployed say they have less in savingsContinue Reading

GPO Provides Digital Access To Warren Commission Report and Hearing Volumes

“In commemoration of the 50th anniversary of the release of the Warren Commission Report, the U.S. Government Printing Office (GPO) makes the complete report and 26 hearing volumes available on GPO’s Federal Digital System (FDsys). The Commission was created by President Lyndon Johnson and chaired by Chief Justice Earl Warren to investigate President Kennedy’s assassination.Continue Reading

New GAO Reports – Army Corps of Engineers, Bureau of Prisons, CFPB, ID Theft, Oil and Gas Transportation, Affordable Care Act

ARMY CORPS OF ENGINEERS: The Corps Needs to Take Steps to Identify All Projects and Studies Eligible for Deauthorization, GAO-14-699: Published: Aug 21, 2014. Publicly Released: Sep 22, 2014. BUREAU OF PRISONS: Management of New Prison Activations Can Be Improved, GAO-14-709: Published: Aug 22, 2014. Publicly Released: Sep 22, 2014. CONSUMER FINANCIAL PROTECTION BUREAU:Some Privacy and Security Procedures for Data CollectionsContinue Reading

Journal of Open Access to Law

“JOAL is an open-access, peer-reviewed academic journal of international scope.  Its purpose is to promote international research on the topic of open access to law. JOAL provides an international forum for academic researchers as well as for practitioners of open legal publishing. Central topics of concern include critical construction of legal information methods governance of newContinue Reading

The Case for Writing International Law into the U.S. Code

Coyle, John F., The Case for Writing International Law into the U.S. Code (September 19, 2014). Boston College Law Review, Forthcoming. Available for download at SSRN: “In recent years, the U.S. judiciary has taken steps to limit the role played by international law in the U.S. legal system. This Article seeks to explain this retreatContinue Reading

Hedge Funds versus Mutual Funds (2): An Examination of Multialternative Mutual Funds

McCarthy, David, Hedge Funds versus Mutual Funds (2): An Examination of Multialternative Mutual Funds (September 19, 2014). Available at SSRN: “This paper examines those mutual funds classified by Morningstar as “Alternative.” It follows an earlier paper, “Hedge Funds vs. Mutual Funds: An Examination of Equity Long/Short Funds,” which found that equity long/short mutual funds didContinue Reading

Global Carbon Budget

“Carbon dioxide (CO2) emissions from fossil fuel burning and cement production increased by 2.3% in 2013, with a total of 9.9±0.5 GtC (billion tonnes of carbon) (36 GtCO2) emitted to the atmosphere, 61% above 1990 emissions (the Kyoto Protocol reference year). Emissions are projected to increase by a further 2.5% in 2014. In 2013, theContinue Reading

New on LLRX – Cyclists, Motorists, and the Theory of Move Over Laws

New on – Cyclists, Motorists, and the Theory of Move Over Laws - Fay Wein is an avid bicycle-rider, content and communication specialist, and director of marketing at a New York firm. She examines the increasingly contentious arena in which cyclists and motorists are increasingly clashing, on city streets and rural roads, with dangerous consequences.