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July 23, 2014

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Controversial rescue of underwater NLV homes to be decided in June

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Richard Brian

Foreclosed homes for sale line the 9800 block of Fast Elk Street in northwest Las Vegas in 2007.

The North Las Vegas City Council will decide in June whether to endorse a controversial and complex plan to use its powers of eminent domain to help refinance underwater home mortgages after receiving more information on the proposal during a workshop Tuesday night.

For the second time in as many months, the city council heard a presentation from representatives of Mortgage Resolution Partners, a company with a unique plan to prevent foreclosures in a housing market still reeling from the recession.

The plan calls for the use of private dollars to purchase underwater mortgages and then refinance them at a lower principal amount to the original homeowner. Doing so would require the city to lend its power of eminent domain, a prospect that has raised questions among local officials and drawn protests from bankers and real estate professionals.

Tuesday’s three-hour workshop provided a chance for city council members to ask Nevada representatives of Mortgage Resolution Partners — which include Las Vegas attorney Byron Georgiou, developer Michael Saltman and Daniel Greenspun, a member of the family that owns the Las Vegas Sun — questions about the proposal, which was first presented at a March meeting.

The council decided to hold another workshop in June that will include a panel of representatives from various industries, including banking and real estate, as well as community housing advocates, who all have differing views on the proposal. They will then vote June 19 on whether to formally engage Mortgage Resolution Partners’ services.

The council’s decision to hold a vote on the proposal is a victory for Mortgage Resolution Partners, which has had little success so far pitching its plan to other local governments in the valley, none of which have formally considered it.

“I think it was a great meeting … we’re heartened by the directive to put this up for action in June,” Georgiou said. “The housing market is a problem that isn’t going away for anyone in North Las Vegas.”

If the deal is approved by the city council, it would give the company permission to begin inventorying homes in North Las Vegas that might be eligible for the program and to begin negotiating with mortgage owners.

So far, five California cities have entered into similar agreements with Mortgage Resolution Partners.

The plan targets a specific subset of underwater home mortgages that are held in mortgage-backed securities that are especially prone to foreclosure, of which there are about 4,700 in North Las Vegas.

Further action would be needed by the city council before any mortgages were actually bought using its powers of eminent domain.

On Tuesday, council members raised a variety of concerns about the proposal, including how it would affect property values, what it would cost the city and who would be responsible for legal fees in case of a lawsuit.

Georgiou said the company’s services would be covered by a per transaction fee and that they would cover all legal fees in case of litigation. Representatives said the program would benefit both the homeowner and the broader community by stabilizing the housing market and that it would not have any effect on home values.

The company stands to earn $4,500 for every mortgage that is refinanced and sold again, and its investors who put up the initial capital to purchase the distressed mortgage will also receive a return.

Many members in the audience of about 40 people were skeptical of the proposal, calling it “unproven” and “untested.”

“Quite frankly I don’t know where to start … there’s so many things that were said here tonight that I disagree with,” said Tim Cameron, who described himself as a representative for asset managers who own the loans targeted by Mortgage Resolution Partners’ program.

Mayor Shari Buck said after hours of presentations on the proposal that she’s still interested and wants to learn more. But before she votes to approve any deal with Mortgage Resolution Partners, she wants to make sure there’s no way it could possibly come back to harm homeowners or the city.

“How exactly does it work? What’s the city’s responsibility?” she said. “And what are the potential downsides?”

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  1. I suppose if this company, Mortgage Resolution Partners, had such a good plan to refinance homes to underwater homeowners, they would be able to do it without having a government entity take away a home through legal measures that will cost the state in paper work, resell to their company, and then hope that the company will resell to the same homeowner - if they are willing to rebuy.

    I'm sorry. This is the worst idea ever. The county or state will get sued, and homeowners will be evicted through eminent domain and there's no way to force them back in to a home once they are basically evicted.

    This whole thing is lunacy. I can't even believe local officials met with these scam artists.

  2. Scam artist is right! Look at it this way what this group does is steal the time it takes to make a investment worth while and accelerate's it. For example let's say I approach Mr. Daniel Greenspun and offer to buy his Las Vegas Sun Newspaper and he say's he would take $30 Million for it then I say No I don't want to pay that for it and he say's that's what I want for it on account it took my Family Years to grow this paper. So I then go to the city and make a proposal to the governing body on a sure fire way to make $10 Million and they say let's hear it. Then I propose that they use their Eminent Domain Policing powers to take Mr. Daniel Greenspun's property for $10 Million I in turn would give the city a 100% return on their money and I would have saved my self $10 Million. This would not be fair to the Greenspun family on account it was them that endured the ups and downs of the company so why should some Vulture Capitalist swoop in and take something that someone else had earned!

    Another example I buy houses and I sell them with owner financing, and when I do this I charge a higher rate of interest usually 9% at current market. It would not be fair to me for someone to take that away from me and only pay me a portion of what I financed it for by simply saying well the home is not worth that now. Which by no means mean that it's not ever going to increase in value to a amount above what it is valued at now.

    At one time when these people bought there houses their homes were worth more than the purchase price and no one said hey let's give a portion of our gain to the mortgage co. now did they NO ONE.

  3. What bothers me is that I was reading the mortgage program called HAMP does a similar refinancing deal and nearly 50% of the people who are refinanced eventually default again. So I guess this mysterious company gets stuck with the homes? Or does the City get stuck? Nice, the City can get in the Real Estate business. You'd think they've learned from their ventures into City Halls and sewage treatment facilities. Guess not..

  4. "Quite frankly I don't know where to start " there's so many things that were said here tonight that I disagree with," said Tim Cameron, who described himself as a representative for asset managers who own the loans targeted by Mortgage Resolution Partners' program.

    Until those shadowy, monolithic loan owners prove they actually have any rights to what they claim to own -- and they'd rather spend a fortune on lawyers to bury that inquiry under an avalanche of paper -- homeowners will continue to get screwed. And why not? Our AG got a small fortune last year to help them, and basically chose to go with the usual band-aid approach. Who knows what happened to the rest.

    "This whole thing is lunacy. I can't even believe local officials met with these scam artists."

    "Scam artist is right!"

    AshleyA, casinok -- not so fast. Georgiou at least comes with an impressive pedigree, having worked with Elizabeth Warrens on that TARP watchdog. There he proved he understands the shell game the rest of you assume is legitimate mortgage banking, and along with Warren issued a scathing report against them. Trouble is nobody listened.

    "What bothers me is that I was reading the mortgage program called HAMP does a similar refinancing deal. . . . ."

    doogie -- good point, though the rest of your post fizzled.

    "Why don't the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them..... in America, it's far more shameful to owe money than it is to steal it." -- Matt Taibbi "Courts Helping Banks Screw Over Homeowners," found in the November 25, 2010, issue of Rolling Stone