IN 2000 Loretta and Clifton Christian bought a two-family home in Irvington, a hardscrabble New Jersey town of 54,000, for $132,000. They poured money into it, fixing the roof and replacing the boiler. But in 2008 the world caved in and the couple lost their jobs soon afterwards; they now live off their pension and the income from a second-floor flat they let out. They manage to meet their monthly mortgage payments of $1,845. But their house is now worth just $71,000, significantly less than the outstanding mortgage of $115,000.

Nearly 11m American homes are similarly “underwater”. Despite the housing recovery, parts of the country are still struggling: 3m-4m people are in default, in foreclosure or awaiting liquidation. According to New Jersey Community United, a lobby group, nearly one in four homes in the state is worth less than the mortgage.

Hence the return of an unorthodox proposal many thought had been laid to rest: for municipal governments to use eminent-domain (or compulsory-purchase) powers to seize underwater mortgages at below the home’s market value and to refinance them at lower rates. Homeowners get to stay put, and the city and a private sector partner split the profit. Governments traditionally use eminent domain to force property owners to sell their land for public projects such as railways. But high foreclosure rates lead to problems like blight, crime and falling house prices; some argue that cities and counties ought therefore to be able to invoke eminent domain in depressed housing markets for the public good.

The San Francisco-based Mortgage Resolution Partners (MRP), the private partner in question, first floated the idea in 2012. Several municipalities in the Inland Empire, a sprawl east of Los Angeles whacked by the foreclosure crisis, expressed interest, but dropped the idea last January under pressure from investors. Greg Devereaux, chief executive of San Bernardino county, one of the municipalities, says public support was not particularly forthcoming.

But like a movie monster, the eminent-domain proposal is back, and apparently stronger than ever. Irvington is in talks with MRP. Nearby Newark, New Jersey’s biggest city, is considering it, as are about a dozen other cities around the country. Most have been influenced by Robert Hockett of Cornell Law School, who has written about municipal governments’ eminent-domain powers. He has been advising several cities about the proposal. Farthest down the road is Richmond, a struggling city east of San Francisco. In July the city wrote to the holders of 624 mortgages asking to purchase the debt at 80% of market value and threatening to invoke eminent domain if it did not obtain satisfaction. (Those that responded said they were not authorised to comply.) The council has voted to push the plan forward several times since then, although it does not yet have the supermajority that state law requires to execute it. Officials hope to get around that by partnering with other Californian cities.