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Of course Matt Taibbi has the story.

Town considering using imminent domain to buy up underwater mortgages at current value and sell them back to the homeowners sans bubble bloat.This scheme is legal and can be done by cities and towns, it does not require congress.

Wall Street is threatening to fight this tooth and nail.  If it is not illegal now, they want to make it so.

The plan is being put forward by a company called Mortgage Resolution Partners, run by a venture capitalist named Steven Gluckstern. MRP absolutely has a profit motive in the plan, and much is likely to be made of that in the press as this story develops. I've heard many arguments on both sides about this particular approach to the eminent domain concept. But either way, I doubt this ends up being entirely about money.

Read more:

Private Equity used to do the Right Thing? OH NOZZZ!  Finally!

I’ve been following this story for months now – I was tipped off that this was coming earlier this past spring – and in the time since I’ve become more convinced the idea might actually work, thanks mainly to the lucky accident that the plan doesn’t require the permission of anyone up in the political Olympus.

Cities and towns won’t need to ask for an act of a bank-subsidized congress to do this, and they won’t need a federal judge to sign off on any settlement. They can just do it. In the Death Star of America’s financial oligarchy, the ability of local governments to use eminent domain to seize toxic debt might be the one structural flaw big enough for the rebel alliance to exploit.

The plan only makes sense in the context of America’s overall economic paralysis. Right now the economy is stuck in a standstill, largely because of the housing bubble. Five or six or ten years ago, when Wall Street was cranking out trillions of dollars of cheap home loans so that they could later be chopped up, pooled, and sold to unsuspecting investors in the form of high-grade securitized bonds, millions of ordinary people jumped on the housing comet, buying big houses for big money.

The problem is, if you bought a house for $300,000 then, it might be worth $200,000 now.

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Of course Wall Street vows to quash this strategy by trying to make sure that there will be no loans for people who refinance this way.
That sounds like illegal redlining doesn't it?

Originally posted to Bluehawk on Sun Jul 22, 2012 at 10:01 AM PDT.

Also republished by Occupy Wall Street.

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