Brandon Boxbaum
83 GEO. WASH. L. REV. 209
A new scheme, first introduced by Professor Robert C. Hockett, and later
advocated for by Mortgage Resolution Partners, seeks to persuade municipalities
and local governments to use its sovereign power of eminent domain to
seize residential mortgages. The power of eminent domain is the power to
take property for a public need, traditionally used to seize real property to
build public lands such as parks and roads. In seizing intangible mortgages
and servicing rights, however, this scheme would interfere with the secondary
mortgage market and harm the many different interests involved. Although
the scheme’s stated purpose of preventing another foreclosure crisis is honorable,
its intrusion into the secondary mortgage market will do more harm than
good. Investors, faced with an unprecedented new risk, will flee the market,
drying up necessary capital for mortgage lenders. Furthermore, the scheme, at
its core, is a profit-making investment, and should not be allowed as a “public
use.” The state model legislation that this Note puts forth would limit the definition of public use in order to forbid this dangerous exercise of eminent
domain.
