Local Governments Don't Get It

Via NBC News:

Governments Mull Radical Solution To Underwater Mortgages: Seize Them

Mario Anzuoni / Reuters

With millions of homeowners still "under water," some local governments are considering a novel solution: condemning their mortgages through the power of eminent domain. 

“Federal programs have not been very successful at all, and the private programs have been of limited help,” said Gregory Devereaux, administrator for San Bernardino County, explaining the government's decision to consider eminent domain, a plan the mortgage industry considers the equivalent of the nuclear option. The hard-hit county's board of supervisors is expected to meet Thursday to consider proposals to help homeowners, including the possible use of eminent domain.

This is patently idiotic and dangerous.

1) It's highly illegal and immoral for any government to step in nullify a contract between two parties when there has been no instances of fraud, let alone force one party to accept terms it did not agree to, basically screwing them out of money.

2) This will set a dangerous precedent for future homeowners, giving incentive to not act with responsibility when making the choice on whether or not to purchase a house.

But what can you really expect from people who have zero respect for or knowledge of economic and contract law?