More than 3.3 million homes went into foreclosure in 2007 and 2008—about 5 percent of the mortgage loans in the U.S.  Many experts expect 3 million more homes to go into foreclosure in 2009 alone.  Additionally, some banks have estimated that it is possible that up to 16 percent of all residential mortgages will go through foreclosure during the next four years.

This crisis situation has led to a number of private and government-sponsored loan modification initiatives.  But the early programs have had little success in reducing homeowners’ monthly payments and keeping people in their homes.

Recently the Obama administration has instituted a new program for beleaguered homeowners facing foreclosure that tries to rectify some of the issues of previous initiatives, but the jury is still out on whether or not the program will be more effective than earlier ones.

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In Kelo v. City of New London (2005), the U.S. Supreme Court held, 5-4, that the city’s use of eminent domain to acquire land for economic revitalization did not violate the Public Use Clause of the Fifth Amendment.  Because the “public purpose” in this instance involved transfer of the land from one private owner to another, as opposed to the land being used for a road, school, or other traditional public improvement, the decision resulted in a firestorm of indignation.

In the years since, most state legislatures and many courts have addressed the issue.  At both the federal and state level, a number of actions have been taken to limit takings for retransfer for economic development.  Experts in the field, however, discuss and debate how much post-Kelo statutes and decisions affect local, state, and federal use of eminent domain to advance redevelopment. 

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