[etcb]

The city would have to pay off the mortgages (and it would be GREATER of the remainder or market price) out of its coffers. In cash.

It appears the city is talking about seizing the mortgage rather than the house itself and then paying the mortgage holder a reduced amount because the fair market value of the collateral has deteriorated. We do live in strange times, but I don't think this will fly under the banner of eminent domain.

[Alberta's Child]

If the city "seizes" a $400,000 mortgage on a home that's only worth $300,000 they're probably on the hook for the entire $400,000. They'd be better off negotiating directly with the bank to see if they can purchase the property outright for $300,000 (or something between $300,000 and $400,000).

Something to keep in mind here is that the moment a municipal government acquires a property through eminent domain, the property is basically purged from the tax rolls and it is generating $0 in property tax revenue.

[Whenifhow]

4:56 Minutes

Richmond, California
Town Wants To Use Eminent Domain To Seize Homes Worth Less Than Mortgage - Wake Up America
http://www.youtube.com/watch?v=nDvEajV2po8