North Las Vegas Looking At Controversial Plan to Help Underwater Homes | Housing
The City of North Las Vegas is considering a proposal to use eminent domain to help underwater homeowners.
If it works, thousands of people would get millions of dollars worth of debt erased and get to stay in their homes.
However, not everyone, including the banking and real estate industries, thinks it is a good idea.
Under the program, the city would use eminent domain, a power usually reserved for big projects like freeways and government buildings, to pay fair market value for properties then give them back to the homeowners with a much more manageable payment.
A private company called Mortgage Resolution Partners would provide funding, using private investor money, for the city to buy the mortgages and would get a fee for every deal.
The homeowners would never have to give up their homes, and according to MRP, it would not cost the city a dime.
Those opposed to the idea, including the Greater Association of Las Vegas Realtors, point out that the plan may not stand up to a legal challenge.
They also say it gives little incentive to lenders to finance a home in the area even for those not involved in the program.
Mortgage Resolution Partners disagree, saying banks want to see people out of their homes.
"They would oppose it because they don't have a solution. They have no solution. Their solution is to effectively drain the family of all their resources until they run out of money then foreclose upon them and put them out on the street. And rent it to somebody else, presumably someone whose home they took in a different circumstance," Byron Georgiou with Mortgage Resolution Partners said.
The company has already signed agreements with four California cities to execute similar plans.
It is set to make a presentation to the North Las Vegas City Council, who are considering the idea, at 5 p.m. Tuesday.
According to MRP, there are more than 4,700 underwater properties in North Las Vegas with a specific type of mortgages held by private label securities that could be helped by the plan.