Shiller calls for “collective action” and eminent domain to restore the housing market

Miami /
Jun.June 25, 2012 03:00 PM

Lowering mortgage balances on a national scale to a level that disincentivizes defaulting on underwater homes would save both banks and homeowners money, while kick starting the housing market. But a lack of communication and government interest has prevented such action thus far. According to a New York Times editorial by Robert Shiller, one of the professors behind the Case-Shiller Index, fixing the housing market will require collective action on the parts of banks, government and homeowners.

Those who own mortgages, home equity lines of credit, residential mortgage-backed securities and shares in banks and finance companies, “live all over the world and have no way of communicating with each other, let alone coming to an agreement to give homeowners a break, “ Schiller said. 

The solution is simply the will to act. Schiller argues for a proposal by Robert Hockett that calls for the government to seize underwater mortgages via eminent domain law.

The plan has federal and local governments paying fair market value for mortgages on distressed homes with capital from new private investment funds. The financial industry would receive compensation for wiping their hands clean of troubled loans, while the government would refinance those mortgages with homeowners so that they don’t cut and run from devalued homes. Schiller said that would stabilize neighborhoods, boost confidence and improve the economy. [NYT]


Related Articles

arrow_forward_ios
Brian Tuttle wins approval for 205 single-family home project in Parkland
Brian Tuttle wins approval for 205 single-family home project in Parkland
Brian Tuttle wins approval for 205 single-family home project in Parkland
Daisy Chaplin and Charles Prince with the property at 6000 North Bay Road (Getty, Google Maps)
Late Broadway legend Harold Prince’s children settle dispute over family’s North Bay Road mansion
Late Broadway legend Harold Prince’s children settle dispute over family’s North Bay Road mansion
Foreclosure lawsuit targets DoubleTree hotel near Miami International Airport
Foreclosure lawsuit targets DoubleTree hotel near Miami International Airport
Foreclosure lawsuit targets DoubleTree hotel near Miami International Airport
The Variety Hotel (Getty)
Lender acquires Variety Hotel in Miami Beach following foreclosure suit
Lender acquires Variety Hotel in Miami Beach following foreclosure suit
Branden Muhl, James Vosotas and Hotel Greystone at 1920 Collins Avenue, Miami Beach (Google Maps, Mahaska, Trans Inns)
Hotel Greystone to reopen in September amid partnership break-up
Hotel Greystone to reopen in September amid partnership break-up
Grand Hotel Fort Lauderdale and Sheridan Capital's Aaron Kurlansky (Facebook via Fort Lauderdale Grand Hotel)
Fort Lauderdale hotel resolves foreclosure suit with $11M refi
Fort Lauderdale hotel resolves foreclosure suit with $11M refi
Variety Hotel (iStock)
Miami Beach hotel heads to foreclosure auction
Miami Beach hotel heads to foreclosure auction
(iStock)
Home prices across globe hit records, prompting worries of bubble
Home prices across globe hit records, prompting worries of bubble
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...