Eminent Domain and the Foreclosure Crisis: Local Action and Social Movements in Suburbs of Color

• In Event: 095 - Section on Community and Urban Roundtables (one-hour)
  In Refereed Roundtable: Table 15. Suburbs

Abstract

In the face of weak federal response to the housing crisis, many local and county officials have explored a novel response to rescue “underwater” homeowners -- i.e., those who owe more than their properties are worth and remain at high risk of foreclosure. Local and county governments would use their powers of eminent domain to force lenders and investors to sell their mortgages to the government at a discount. Local governments would then restructure underwater loans, reduce the principal, and resell the mortgages to investors. As one might expect, the financial industry has stridently objected to these county and local eminent domain plans, which we will call CLEDs, for short. After providing a brief overview of these plans, this article places them within three related contexts. First, it situates the CLEDs within the political economy of housing, and specifically the relationship between risk and value; the CLEDs counter the financial sector’s best efforts to place the full burden of capital devaluation on homeowners while restoring conservative risk-taking norms. Second, we consider the racialized geographies of this recessionary devaluation; the strongest support for the CLEDs maps onto a particular geography of subprime lending, namely larger suburban jurisdictions where a majority of the population is Black or Latino. We end by considering the strategies of the social movements that support the CLEDs, the counterstrategies of the financial sector, and how the conflict may rescale the politics of housing finance.

Authors

• Christopher Niedt, Hofstra University

• Brett Christophers, Uppsala University