Bold Calif. Mortgage Plan Faces Eminent-Domain Hurdles

Law360, New York (July 12, 2012, 7:10 PM EDT) -- While Tuesday's bankruptcy of San Bernardino County, Calif.'s largest city may dampen its plans to use eminent domain to ease its crippling foreclosure crisis, legal challenges to the government's power to condemn and take over houses with underwater mortgages pose an even bigger threat.

The California county is moving ahead with a bold plan that would see it use private investors' money to buy underwater mortgages through the eminent domain process and in effect write new, lower-cost mortgages for existing homeowners, despite the Wednesday bankruptcy filing...
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