Mortgage Resolution Partners (MRP), a firm based in San Francisco, thinks that power could be extended to buy up mortgages. Large numbers of struggling homeowners hamper economic recovery, runs the argument; relieving them, with proper compensation for the mortgage-holders, would satisfy the constitutional requirement for “public use”.
Under its proposal, MRP would work with officials to identify mortgages ripe for seizure; at first, only homeowners who were up-to-date on their repayments would be eligible. MRP would drum up private investment to finance the mortgage purchases at prices determined in court (as in all eminent-domain cases). Once the loan is bought, the principal would be cut and the repayment terms eased. A win for the homeowner; a win for the local economy, thanks to growing consumer spending and (with luck) a revived construction industry; and a win for MRP, which earns a juicy fee from each transaction.