Richmond Threatens Eminent Domain To Address Foreclosure Crisis

While the 5th amendment provides for taking property for public use with just compensation, doesn’t Section 10 of the constitution prohibit the states from interfering with contracts.

Section. 10: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

When a financial institution loans money to a person to purchase a home, the lender and borrower enter into a contract for repayment of a specific dollar amount. The amount subject to this contract is not affected by either the appreciation or depreciation in value of the property bought with the borrowed money. The property (house) value at any given time is irrelevant to the contractual obligation. The fact that the property may have been pledged as collateral for the loan does not have anything to do with the contract itself. It would seem that a contract could only be modified or taken at the federal level through a bankruptcy proceeding.

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