Post-Bubble Foreclosure-Prevention and -Mitigation Options in Seattle

Abstract

This paper, commissioned by the Seattle City Council, takes the measure of Seattle's post-bubble negative equity and foreclosure problems, estimates numbers of underwater loans that have benefitted by existing federal, state and local programs, and recommends several options that the City has not yet explored but ought to consider. For underwater but not yet defaulted loans, these include 'lease swap' arrangements of a kind advocated by the author since 2011 and public-private eminent domain partnerships of the kind advocated by the author since the housing bust began. For already foreclosed properties, the author recommends a variation on the 'land bank' approach being pioneered in several other U.S. cities.