Wednesday, The Seattle City Council voted to explore various options in helping local homeowners who face foreclosure (one-fifth to one-third of Seattle homeowners are underwater, depending on who you ask). However, a few of those options have some folks a little worried.
The most concerning is the option of using eminent domain.
The city would seize the mortgage from the bank and allow the homeowner to pay the city back at a reduced rate. Some say this type of principal reduction is the only way to go; others say it would create further financial instability because lenders would shy away from any city seizes mortgages. Another option presented was to create a municipal land bank that put a tax on foreclosed properties and turn that in a "beneficial community use," whatever that means.
City lending officials will complete their list of viable options to help Seattle homeowners and present them to the city council in the near future. In the meantime, how does the idea of eminent domain strike you? Is there a better option?
· Underwater homeowners get a chance for relief in Seattle [King5]
· Council considers using eminent domain, land bank to bail out underwater mortgages [CHS]