BLIGHT PREVENTION: THE USE OF EMINENT DOMAIN TO CONDEMN UNDERWATER MORTGAGES IN WISCONSIN

Blight costs Wisconsin taxpayers millions of dollars. However, there is a solution to prevent blight before it occurs in this state, and that solution is based on a plan enacted by the city of Richmond, California (the Plan). There, with the help of Mortgage Resolution Partners, the city took an unprecedented step to slow the city's foreclosure rate. Using its eminent domain power, the city enacted a plan to condemn underwater mortgages. The city would then refinance the mortgages and transfer them back to the current homeowners. This Comment will assume that the Plan, although controversial, is permissible under both the Fifth Amendment's Takings Clause and the Wisconsin Constitution's similar provision. Using the Blight Elimination and Slum Clearance Act ( the Act), Wisconsin cities can and should follow Richmond's lead by condemning underwater mortgages to prevent the dissemination of blight. The purpose of the Act is to provide for the elimination and prevention of blight. Due to the direct correlation between underwater mortgages and foreclosure, using the Act to condemn underwater mortgages can prevent the blight associated with foreclosed homes. This Comment describes how the Act provides for the steps necessary to implement the Plan and argues the necessity of the Plan in Wisconsin cities, especially Milwaukee and Racine. This Comment concludes by describing the Plan's many benefits to homeowners, the general public, local governments, and lenders alike.