Eminent Domain rides again...

The City of Richmond, just north of Oakland, has decided that they would like to be the opposite of New London, CT.  As some of you may recall, New London went all the way to the supreme court to use eminent domain on an entire neighborhood.  This was to then be handed over to a developer so that a wonderful new and expensive neighborhood could be built for the employees of the Pfitzer facility that had been given huge tax breaks for ten years as an incentive to open shop there.  However, despite winning in court, all plans for redevelopment fell through and nothing was built.  Pfitzer closed up shop and moved out just about the time that the tax breaks expired.  And now the area has been used as a dump for debris from Hurricane Irene.  On the bright side, 44 states now have laws in place to prevent these types of shenanigans from happening.

Richmond is a east bay city that includes a neighborhood dubbed the Iron Triangle.  Comparisons to the Vietnam War area of the same name are due to the drug and criminal activity that goes on there.  During the housing boom times, it was famous for having a three bedroom home on a large lot for sale for Less than $30K (ish).  However, due to crime levels, nobody wanted it.  Now they want to play Robin Hood and use eminent domain to save people from the evil bankers.  In a reverse of what New London did, they want to use eminent domain to seize the loans of the underwater homes in the neighborhoods designated.  The banks will be paid a reduced sum for this seizure.  They will then have the homes put under new loans, more affordable to the "homeowners".  

See, here's the problem.  If we shouldn't be allowing the government (local, state or federal) to use eminent domain to take people homes/land and give it to a private developer (and I agree that this should not happen), then we should not allow said government to use eminent domain to fix the mistakes of private citizens who can't do math.  They all willingly agreed to purchase these homes at those prices.  If they can't do the math or take the time to read the contract, it's not the government's job to save them.  If the loans were deemed to be dishonest, then there are other laws and options to be used.  This is not the solution and it sets a bad precedent if allowed.