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October 21, 2014

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NLV further examines plan to seize underwater mortgages

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A foreclosed home is seen Thursday, April 28, 2011.

North Las Vegas City Council members will take a closer look Tuesday night at a controversial and complex proposal to use eminent domain to seize underwater mortgages in an attempt to boost the city’s sagging housing market.

Council members and the public were first introduced to the plan to use private dollars to help underwater homeowners refinance their mortgages during a presentation by representatives from Mortgage Resolution Partners at a March 6 city council meeting.

Council members were skeptical of the proposal, which has not been tried anywhere in the country, but agreed to meet with Mortgage Resolution Partners representatives at a later date to get more information and have their questions answered.

Tuesday night’s special meeting is being described as a workshop to receive evidence and testimony on the proposal. It begins at 5 p.m. in the council chambers at North Las Vegas City Hall, 2250 N. Las Vegas Blvd., and is open to the public. The meeting is informational and will not result in any final action on the proposal.

Mortgage Resolution Partners’ plan calls for the company’s private investors to purchase a specific subset of underwater home mortgages that are held in mortgage-backed securities. The mortgages would be bought at market value significantly below their initial value and then refinanced back to the original homeowner with a lower principle.

North Las Vegas would serve as the middleman in the process, using its power of eminent domain to seize the mortgages from trusts that own the mortgage-backed securities. Once the mortgage is refinanced and sold again, the city would receive a small fee for its troubles.

Investors in Mortgage Resolution Partners would see a return on their investment whenever a home is refinanced and the company itself would receive a flat $4,500 per transaction fee.

Nevada representatives for the company — which include prominent Las Vegas attorney Byron Georgiou, developer Michael Saltman and Daniel Greenspun, a member of the family that owns the Las Vegas Sun — argue the program will help homeowners facing foreclosure and prevent blight in North Las Vegas neighborhoods still reeling from the recession.

But the plan has drawn fierce opposition from bankers and real estate agents who question whether the untested plan is even legal. Detractors warn of unintended consequences from using eminent domain to seize mortgages, with some bankers warning they would stop lending for home mortgages in cities that adopted the program.

As of March, four cities in California — La Puente, El Monte, San Joaquin and Orange Cove — have made similar agreements with Mortgage Resolution Partners, although the company has not yet purchased any mortgages, its representatives said.

The company estimates 4,700 homes in North Las Vegas could qualify for the program if it is approved by the North Las Vegas City Council.

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  1. This is the reason we just went through the hard times. We have to stop making partnerships with private business.
    This whole plan is for the city to use it's policing powers ie eminent domain to take or force some other owner to handover their investment so some other company can make the money and then as a token of appreciation cut the city in on the take!
    It's also my understanding that the property has to go through the condemnation process, which means the property would have to be brought up to todays building codes.
    And who is paying this $4,500.00 fee? The homeowner who can't pay his mortgage now? let me guess the owner can finance that in right?

    Eminent Domain seized property is supposed to be used for public use! This is just having the city to be the Muscle in a shakedown!
    These folks that are underwater need to work it out with their mortgage company and if that doesn't work then the owner has the option of surrendering the deed in lieu of foreclosure and then this private company can pick it up at the auction on the courthouse steps. Which is why they want this deal is to cut you and I (The PUBLIC) out from bidding on it.
    Bottom line creative financing will lead to creative litigation!

  2. I agree, this would be a misuse of eminent domain as it exists. It would also take away the rights of those with an underwater mortgage that were persay surviving with their normal payments even thought the property value were upside down.

    I fail to see why the city of NLV would resort to this when the housing market is starting to tick back up. It also fails to take care of the actual problems that led the city to it's current state.

    I wonder instead of focusing on home owners, why not focus on dead beat dads, or unpaid civil cases? Why not focus on consumer debt other than households? I see this as adventagious to a company but not a cit as a whole.

    I hope this doesn't go through. If I were a homeowner in the city of NLV and this happened to me I would be dialing my lawyer and not agreeing to anything. Nor would I purchase the home back at a refinanced state from a company I wasn't given the option of working with. And what then? You have more Las Vegans out of their home.

    This whole deal stinks.

  3. They will be looking at Millions of dollars and thousands of hours in court if they try this.

    There is a reason no other area has gone along with them so far. NLV cannot afford to be the test dummy on this one.

  4. Homes are like stocks on the stock market just because it's not worth what you paid for it doesn't mean you've lost money! You haven't lost anything until you sell it. What it does mean is that you just move on on your investment until you can see a profit.
    The purpose for buy as opposed to renting is so you can lock in your housing cost.