Eminent Domain question

[Rick Bradd]

Greetings, I have been lurking on BP for some time now trying to absorb as much knowledge as I can, I am primarily interested in learning to invest in notes. That said I have been following any news, forum updates and blogs and I came across this article that disturbs me, and I would like to know if anyone with more experience has any thoughts on how this might effect an investor who owns a note. Basically some So. California County's are considering using Eminent Domain laws to seize mortgages on under water properties, pay off the mortgages at a discount to the current homes value, and refinance the property at the new home value.

My concern and question is, if I were the note holder on a property and this were to happen, could (would) I lose my a chunk of my investment?

http://realestate.msn.com/can-your-city-seize-your-mortgage

Thanks everyone for for sharing your knowledge, i have really learned a lot.
Rick