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Nevada city rejects eminent domain plan for mortgages
Source: Reuters
Nevada city rejects eminent domain plan for mortgages
By Jim Christie
SAN FRANCISCO | Thu Sep 5, 2013 1:28am EDT
(Reuters) - The city council in North Las Vegas, Nevada, on Wednesday rejected a plan to use eminent domain if necessary to help refinance "underwater" mortgages, an idea the mortgage industry opposes at a time when property markets are recovering.
The council voted 5-0 against the plan proposed by Mortgage Resolution Partners (MRP) for a partnership with North Las Vegas to buy the mortgages or seize them through eminent domain, a move critics said would unsettle the market for private-label mortgage-backed securities and push mortgage interest rates up.
City Councilman Wade Wagner questioned the San Francisco investor group's proposed use of eminent domain for acquiring delinquent and performing underwater loans. A mortgage is under water when its unpaid balance is more than the market value of its property, a common problem in Nevada's third-largest city.
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MRP's plan for North Las Vegas was similar to its plan for Richmond, California, another city hit hard by the mortgage crisis. But Richmond may back MRP's plan, which has prompted a lawsuit by investors holding mortgages targeted by it. In Richmond's case, eminent domain would be invoked in an effort to ward off blight, targeting more than 600 mortgages to prevent borrowers from defaulting on them, according to its leaders.
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By Jim Christie
SAN FRANCISCO | Thu Sep 5, 2013 1:28am EDT
(Reuters) - The city council in North Las Vegas, Nevada, on Wednesday rejected a plan to use eminent domain if necessary to help refinance "underwater" mortgages, an idea the mortgage industry opposes at a time when property markets are recovering.
The council voted 5-0 against the plan proposed by Mortgage Resolution Partners (MRP) for a partnership with North Las Vegas to buy the mortgages or seize them through eminent domain, a move critics said would unsettle the market for private-label mortgage-backed securities and push mortgage interest rates up.
City Councilman Wade Wagner questioned the San Francisco investor group's proposed use of eminent domain for acquiring delinquent and performing underwater loans. A mortgage is under water when its unpaid balance is more than the market value of its property, a common problem in Nevada's third-largest city.
[font size=1]-snip-[/font]
MRP's plan for North Las Vegas was similar to its plan for Richmond, California, another city hit hard by the mortgage crisis. But Richmond may back MRP's plan, which has prompted a lawsuit by investors holding mortgages targeted by it. In Richmond's case, eminent domain would be invoked in an effort to ward off blight, targeting more than 600 mortgages to prevent borrowers from defaulting on them, according to its leaders.
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Read more: http://www.reuters.com/article/2013/09/05/us-northlasvegas-eminentdomain-idUSBRE98406B20130905