• San Bernadino County and the cities of Ontario and Fontana, Calif., have talked about using trying to use their eminent domain authority to take underwater mortgages away from lenders and restructure the loans.
• Eighteen groups that represent banking, securities and housing interests said the tactic would seriously reduce credit availability.
• The Inland Empire, where the idea is growing, has been hit hard by the downturn.

From the article:

Eighteen banking, securities and housing groups on Thursday issued a stern warning to three California municipalities pondering the use of eminent domain to seize troubled mortgages from investors.