NORTH LAS VEGAS, Nev. -- The North Las Vegas City Council has rejected a controversial plan to use eminent domain to help homeowners whose mortgages are underwater.
Under the plan proposed by a company called Mortgage Resolution Partners, the city would have used eminent domain to take over underwater homes, refinance the property and sell it back to the homeowner at current market price.
"At the end of the day, it appeared to me that we just didn't have the manpower, the sophistication to do this and with all the pending lawsuits in place, I didn't want to see us in court," North Las Vegas Mayor John Lee said.
MRP would have provided money to the city, through private investors, to buy the mortgages and then received a fee for every home that was flipped.
Those opposed to the idea, including the Greater Association of Las Vegas Realtors, pointed out that the plan may not have stood up to legal challenges and would have hurt the recovering housing market by giving banks no incentive to finance homes in the area.
GLVAR President Dave Tina and Nevada Association of REALTORS President Patty Kelley issued the following statements in response to the Sept. 4 vote:
"Like many others who opposed this scheme, GLVAR members believed all along that this would have been bad public policy, and likely illegal. We also agreed with federal housing regulators, lenders and other experts who said it would harm the housing market throughout Southern Nevada just as it is starting to recover," Tina said.
"Their rejection of the contract with MRP is in stark contrast to the decision of the previous council on this matter, and is a reflection of the serious ramifications associated with this hair-brained scheme foisted on the council by MRP officials," Kelley said.
The council voted against the plan after several months of discussion and debate.
Mayor John Lee said he's talking with state lawmakers to debate ways to fix North Las Vegas' foreclosure problem in the coming months.