As of March 28, the U.S. had 90,566 vacant homes in foreclosure (what the industry calls zombie homes). Florida led with 90,566, but Illinois was second with 31,688. It does not have to be this way.
When the derivatives scandal hit Iceland, the government of Iceland nationalized the banks and put the top executives of those banks in prison. Instead of bailing out the banks, they bailed out the middle class. The U.S., in contrast, paid $5.3 billion in bonuses with TARP money to the people who caused the economy to collapse.
The federal government is owned by the Big Banks. The revolving door between the Treasury Department and Wall Street has been spinning like a centrifuge for decades. The influence Wall Street has over state government is substantial too.
It is up to the local municipalities to fix this mess and there is a way to do that: eminent domain. Each city, town or village can condemn homes with underwater mortgages, buying them at their current value and then allow the original homeowners to refinance under the lower rate. This will put pressure on banks to refinance voluntarily.
Seventy percent of the U.S. economy is consumer based. The less money Americans give to the banks the more they have to spend. This is what Iceland did on a national scale, and as a result Iceland's economy is growing faster than the U.S.'s and the EU's. Every homeowner with an underwater mortgage should qualify for eminent domain refinancing through their local municipality. We need to elect leaders who are brave enough to make eminent domain refinancing an essential part of their platform.