Wednesday, Aug. 21, 2013 | 12:25 p.m.
A hearing tonight before the North Las Vegas City Council on a controversial proposal to use eminent domain to refinance underwater home mortgages has been postponed, according to a memo from Mayor John Lee.
The council voted 4-1 in June to partner with Mortgage Resolution Partners and allow the company to begin surveying the North Las Vegas housing market to identify homes that fit its refinancing program.
At tonight’s meeting, the company was scheduled to lay out a plan to begin implementing the complex program it asserts will help stabilize the housing market.
Lee’s short memo says the agenda item regarding MRP has been tabled and a new date for a hearing will be announced at tonight’s meeting.
One possible reason for the delay is the absence at tonight’s meeting of Councilman Wade Wagner.
Wagner was the lone vote in opposition to the refinancing plan in June, citing concerns that the use of eminent domain in the acquisition process would violate state law and expose the city to costly litigation.
North Las Vegas is the sixth and largest city to pursue MRP’s plan, which calls for the company’s private investors to purchase underwater home mortgages that are held in mortgage-backed securities. The mortgages would be bought for significantly less than their initial value and refinanced back to the original homeowner with a lower principal.
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 fee of several thousand dollars for its troubles.
Investors in Mortgage Resolution Partners would see a return on their investment whenever a home is refinanced, and the company would receive a flat $4,500 per transaction fee.
MRP’s Nevada representatives — including Las Vegas attorney Byron Georgiou, developer Michael Saltman and Daniel Greenspun, a member of the family that owns the Las Vegas Sun — have described the plan as a novel way to help underwater homeowners and prevent costly blight in neighborhoods.
At least one lawsuit has been filed against North Las Vegas to stop the MRP program, but the legal battle is even more intense in Richmond, Calif., another city that has partnered with the company.
Richmond, a town of 106,000 in the Bay Area recently mailed notices expressing interest in acquiring the mortgages of more than 600 homes, triggering a lawsuit earlier this month from several banks and investment firms.
The federal government has also taken a negative outlook on the MRP program after the Federal Housing Finance Agency announced this month that it would instruct mortgage lenders Freddie Mac and Fannie Mae to “limit, restrict or cease business activities” in any city that uses eminent domain to restructure mortgages.
The agency’s statement provides some backing to a local coalition of real estate, lending and finance professionals who oppose MRP and for months have derided the company’s plan as speculative, untested and posing a threat to the stability of the home lending market in North Las Vegas.