San Francisco Debates Eminent Domain for Mortgages: Muni Credit

San Francisco may become the biggest U.S. city to use its development powers to help homeowners avoid foreclosure, partnering with another California community whose own plan has come under fire from investors.

The proposal from a member of San Francisco’s Board of Supervisors would use eminent domain to take over loans on property with a market value below the mortgage amount. A lawmaker says it would help minorities in the city of about 837,000, while some officials see the move increasing borrowing costs and discouraging investors.