Eminent Domain to the Rescue, or Not So Much?

By: Jennifer Lawson-Zepeda

There’s a new sheriff in town!  An underwater sheriff.  This sheriff is about to pull up the home owners who have underwater loans, and rescue them; or maybe not.

Eminent Domain


What is ’eminent domain,’ you may be asking?

According to most explanations, it is the right of a government or its agent, to expropriate private property for public use with payment of compensation.

Generally, this is used to claim properties the government feels may be in the way of a public use project.

For instance, a tract of homes that may lie right in the path of where a new freeway will be built.  The government will purchase these homes at highly reduced prices (under the eminent domain act) and claim the land for public use projects, like freeways.

Well how does that work to help homeowners?

In San Bernardino County, they’ve found a new use for expropriation.  And it has all the sights and sounds of that God-feared word that capitalists hate…socialism!

Well…that is, if you get right down to the basics of agrarian land reforms, it does.

Except…expropriation and eminent domain are supposed to be different; well…at least, when it comes to capitalism.

How?  Like this:

Expropriation is supposed to be the politically motivated and forceful confiscation and redistribution of private property outside of common.

Unlike eminent domain or laws regulating the foreign investment, expropriation takes place outside of common law and is generally used by revolutionary governments.

Or, that’s what most governments would WANT you to believe!

The term appears as “expropriation of expropriators (ruling classes)” in Marxist theory, and also as the slogan “Loot the looters!”  (Source:  http://en.wikipedia.org/wiki/Expropriation)

Land Reforms?

That’s how capitalists like to explain it, anyway.  And they accentuate this by demonstrating things like how horrible it was that revolutionaries like the FMLN in El Salvador, during the civil war there, expropriated land from the wealthy and gave it to cooperative farmers or peasants.

The overall agrarian reform program was to be implemented in three phases, only the first of which achieved any effective results. Phase I called for the expropriation of all landholdings over 500 hectares, with owners allowed to keep as “reserve” 100 to 150 hectares, depending on land quality, in order to continue farming.

The government, aided by the army, expropriated over 230 estates, comprising 15 percent of El Salvador’s farmland (or 10 percent, if reserve lands are excluded). This included 14 percent of total coffee land, 31 percent of cotton land, and 24 percent of sugarcane land; over 60 percent of the expropriated holdings, however, were pasture or fallow land, including forests and mountains not well suited to cultivation.  (Source:  Agrarian Reform – El Salvador)

Of course, they never mention that the wealthy actually expropriated the same land years before with the help of wealthy American businessmen.  They did this under names like United Fruit; by passing unfair laws allowing the wealthy elite (who married many American investors) options to buy the land at highly reduced rates.  Rates that the Salvadoran peasants didn’t have access to.

In 1959, two percent of the population owned sixty percent of the land, and fourteen families were said to own the country of El Salvador.  El Salvador’s elite were economically progressive but politically conservative — opposed to any threat to their power, opposed to reform that hurt them while benefiting others connected with farming.

Against dissent, secretive death squads appeared, consisting of people with military and law-enforcement backgrounds, and apparently bankrolled by rich conservatives. Political assassination was on the rise, and, as in Chile and Argentina, people were disappearing.

Intolerance for dissent was also expressed in July, 1975, when the army fired on demonstrators that had gathered in the capital, San Salvador. Violence was not enough to quell dissent, and the military government tried appeasing the unrest with minor land reforms — the forced rental or possible expropriation of lands not being used by big landowners — but the law was not enforced. Reform-minded priests — also called liberation priests — were busy organizing the rural poor, as were secular revolutionaries.  (Source: Civil War in El Salvador)

You see, with capitalism, it’s only bad expropriation when the revolutionaries do it.  When the wealthy elite take lands that they aren’t entitled to (usually after murdering the land owners) it isn’t expropriation; it’s legal entitlement.

However, in the U.S. things may be changing the word…expropriation.

San Bernardino Plan


In San Bernardino, the plan is to use the theories of expropriation and eminent domain together, to better the financial condition of the individual citizen and land owner:

A plan by San Bernardino County to seize mortgages and restructure them for underwater homeowners using eminent domain is perhaps the most aggressive example of how local governments are seeking new ways to combat foreclosure.

The cities of Ontario and Fontana are partnering with the county to create a Homeownership Protection Program that would use private funds to acquire underwater mortgages from investors. The county and the two cities have created a joint authority to explore and possibly enact the plan, and the first public meeting of that authority will be held next week.

David Wert, a spokesman for the county, said the program is worth exploring because it could offer a solution to one of the region’s most entrenched problems: the vast number of loans that are stuck underwater, with more money owed than the property is worth. If the program were to go countywide, it could benefit 20,000 to 30,000 homeowners, he said.  (Source:  Click here to find out more! San Bernardino County weighs eminent domain to fight foreclosures)

However, there is another side to this plan.  The side of the California Mortgage Bankers Assn. and the American Bankers Assn who are fighting against this plan.  The same people who stand to lose a great deal of money they have planned to make off of foreclosures, if this plan isn’t allowed.


This is one of three parts that Jennifer Lawson-Zepeda has written on the subject for more visit her blog @ http://lawsonzepeda.blogspot.com