No, I'm not missing the point. I'm trying to figure out their logic here. Which, I believe would be that they are trying to pay "just compensation" for a mortga

No, I'm not missing the point. I'm trying to figure out their logic here. Which, I believe would be that they are trying to pay "just compensation" for a mortgage, based on the actual value of the house, and a built-in discount. The question is: is this a fair estimate of "just compensation". And it just might be, if you look at the mortgages in aggregate. It is harder to argue with an individual home, but when the entirety of all homes underwater is taken into account, that has a known risk associated with it. Each mortgage is different at the individual level, and so the risk would be harder to include in a discounted price. But when you lump them all together, you can start to look at how the risk affects the entire group, so you could start to apply the risk discount across the board. Some will be more risky, and others less. At least, that would be an arguable theory...