A few posts back we discussed the technique of government utilizing its Eminent Domain power to force mortgage restructuring by taking mortgages at their current fair market value (not face value) and thrn having investors push money into government in order to modify the terms of the borrower's payments.
Thereafter, the Real Property Committee to the Suffolk Bar Association discussed this topic at our monthly meeting and addressed the issue of if Eminent Domain could force the taking at the depressed value or if instead, the taking should be had at the pre-depressed value as Eminent Domain takings had occurred during the Great Depression - our most similar reference in case law. To be clear, there are Eminent Domain cases that dispute the value at which property should be taken during a depressed market and it is unclear if, in NY, Eminent Domain could even be utilized to take mortgages at their current market value instead of their pre-depressed value.
Well our Congress now has a bill, HR 5397, Defending American Taxpayers from Abusive Government Taking Act of 2012, which basically prohibits Federal Agencies from partaking in such restructuring through Eminent Domain. So even if local government did utilize Eminent Domain, if this bill passes, many many mortgages would be off limits.
Your author doubts the bill will pass because there has been so much push back on the use of Eminent Domain in the first place throughout our Country, the issue of valuation in the second place within NY and other States, and the history of not much really getting done in Congress these days.
Regardless, to view & track the bill, as it is intellectually interesting, click here.