California proposal to condemn mortgages; will it be next in New Jersey?

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In the foreclosure-battered inland stretches of California, local government officials desperate for change are weighing a controversial but inventive way to fix troubled mortgages: Condemn them. Officials from San Bernardino County and two of its cities have formed a local agency to consider the plan. But investors who stand to lose money on their mortgage investments have been quick to register their displeasure. refinance

Of course, there's another investor behind this that will earn fees for arranging the taking of the loans and their restructuring. Others are livid over the proposal. refinance

Timothy Cameron, managing director of the Securities Industry and Financial Markets Association's asset managers group, told the authority that residents of the region would find it harder to get loans and investors — including pensioners — would suffer losses. He also said such a move would invite costly litigation. "The use of eminent domain will do more harm than good," he said. "We need mortgage investors and lenders to come back to these fragile markets — but this plan will force both groups to avoid them."

Will it work in New Jersey? What do you think?
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