Bob Hockett has posted this update to his plan by which localities would use their power of eminent domain to take underwater mortgages and reduce the principal amount owed so that the debt would be sustainable for homeowners.  The discussion on pages 19-20 of how the solution can benefit everyone from homeowners to junior lien-holders is particularly interesting.  It appears as if this proposal has been gaining traction since the summer with the FHFA taking note as well as the bar and the securitization industry.