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University of Baltimore Journal of Land and Development

Abstract

The 2008 Financial Crisis and the ensuing Great Recession sent shockwaves throughout the U.S. and global economy, wreaking havoc from Wall Street to Main Street. The Crisis harkened economic contraction, high unemployment, and elevated rates of home foreclosure. While the financial industry recovered, spelling an end to one crisis, another continues - the Foreclosure Crisis. The rate of home foreclosure, already ominously on the rise before 2008 and growing in intensity and breadth in the aftermath of the Financial Crisis, provides the foundation for this paper. This article examines an innovative public-private partnership between a private firm, Mortgage Resolution Partners (MRP), and local governments concerned with the negative side effects of foreclosure on local communities. The MRP - local government Proposal ("Proposal") is aimed at preventing future home foreclosures. Under the Proposal, local governments will seize distressed home loans and mortgages from the private trusts currently owning them. After seizure, the local government will renegotiate new mortgage loans with the homeowners to reduce the amount of principal owed. While the modern causes of foreclosure are no doubt complex, the Proposal centers on local government's use of a power predating American Independence - eminent domain.

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