Housing help for Nevadans in budget bill

By Lisa Mascaro

Wednesday, March 25, 2009 | 1:14 p.m.

WASHINGTON — A proposal from Senate Majority Leader Harry Reid to help Nevada homeowners avoid foreclosure has been included in the budget blueprint making its way through the Senate.

Reid announced the inclusion of his provision this afternoon following a lunch meeting with President Barack Obama and Democratic senators. It was the Senate Budget Committee Chairman, Sen. Kent Conrad of North Dakota, who included Reid’s request in the draft budget.

Details were not immediately available, but Reid earlier this week said Obama's housing plan did not go far enough to help Nevadans whose mortgages are underwater — meaning they owe more than homes are worh.

Reid had asked Conrad to include a a housing reserve fund that could entertain solutions, such as one bill before the Senate that would allow judges to write down the terms of mortgages for homeowners who file for bankruptcy.

Reid had also mentioned a so-called "safe harbor" provision to help mortgage services avoid being sued by investors for rewriting the terms of loans.

Tucking the housing reserve fund into the budget doesn’t mean those provisions would become law. Rather, it makes it more difficult for opponents to kill the subsequent legislation via procedural moves on the floor.

Obama has supported the bankruptcy provision. Already, judges can alter mortgages for second homes or vacation properties, but not primary mortgages. Reid has called this “perverse discrimination.”

Some Nevada housing experts have said having loans rewritten in bankruptcy court may be the best option as housing prices have plummeted.

Critics, however, believe it will lead to higher mortgage interest rates and fees, as banks recoup losses on rewritten loans.