In the foreclosure-battered inland stretches of California, local government officials desperate for change are weighing a controversial but inventive way to fix troubled mortgages: Condemn them.

Officials from San Bernardino County and two of its cities have formed a local agency to consider the plan. The securities industry has been quick to register its displeasure and say it will only make loans harder to get.

Discussion of the idea is taking place in one of the epicenters of the housing crisis, a working-class region east of Los Angeles where housing prices have plummeted. Last week brought another sharp reminder of the crisis when the 210,000-strong city of San Bernardino, struggling after shrunken home prices walloped local tax revenues, announced it would seek bankruptcy protection.

Now -- and amid skepticism on many fronts -- officials from the surrounding county of San Bernardino and cities of Fontana and Ontario have created a joint powers authority to consider what role local governments could take to stem the crisis. The goal is to keep homeowners saddled by large mortgage payments from losing their homes -- which are now valued at a fraction of what they were once worth.

"We just have too much pain and misery in this county to call off a public discussion like this," said David Wert, a county spokesman.

The idea was broached by a group of West Coast financiers who suggest using the power of eminent domain, which lets the government seize private property for public purpose.

In this case, they would condemn troubled mortgages so they could seize them. Then the borrowers would be helped into mortgages with significantly lower monthly payments.

Steven Gluckstern, chairman of the newly formed San Francisco-based Mortgage Resolution Partners, says his main concern is to help the economy, which is being held back by the mortgage crisis.

"This is not a bunch of Wall Street guys sitting around saying, 'How do we make money?'" he said. "This was a bunch of Wall Street guys sitting around saying, 'How do you solve this problem?'"

Typically, eminent domain has been used to clear property for infrastructure projects like highways, schools and sewage plants. In this case, supporters say, the public purpose is served because communities battered by foreclosures have seen tax rolls decimated and services gutted and have suffered economic blight.

The plan targets homeowners who are current on their mortgage payments but "under water," meaning they owe more on the mortgage than the home is worth...

At the first meeting of the joint powers authority on Friday, chairman and San Bernardino County chief executive Greg Devereaux said the entity — which was inspired by Mortgage Resolution Partners' proposal — has not decided on a specific course of action.

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Editor's Note: The ultimate eminent domain for social justice and redistribution of wealth...a very dangerous move...Truly, and at this specific point, lenders would be wise to work with communities and troubled mortgage holders, rather than to foreclose.


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