San Bernardino County California Government is considering seizing homes that are underwate under its "eminant Doamin" authority. Why? To redistribute property from the depositors, investors, employees and officers of the original lending institution to the purchaser who was unable to make payments.
This removes all accountability and moral hazard. It isolates all risk in the hands of the lender and insulates the purchaser. The ultimate out come will be to depress the current lending market further; increase intrest rates(the measure of risk) and discourage lenders from taking on new loans, even from borrowers with excellent credit.