the Future of Change

This week, my co-author and I, Nick Martin, released a new paper: The Price of Crisis: Eminent Domain, Local Governments, and the Value of Underwater Mortgages, forthcoming in the Temple Civil & Political Rights Law Review.  In it, me make several claims.  First, litigation, (often just the mere threat of litigation) has done more, to date, to remedy the problem of underwater mortgages than any other legal strategy.  Second, local governments have played a role in using such tactics.  Third, eminent domain is akin to such tactics, and even the threat of using eminent domain might be enough to bring banks to the table to reduce principal balances on underwater mortgages.  Finally, we discuss the going price for distressed mortgages on the current market: sixty cents on the dollar.  We argue that, if localities were to seize underwater mortgages through eminent domain, this should be the price, roughly, that they would have to pay to compensate mortgage holders for the taking.  The paper is available for download here.