Mayor appeals to Congress for help out of mortgage fix

By Lisa Mascaro

Sunday, April 13, 2008 | 2 a.m.

The mayor of Las Vegas came to town to discuss the mortgage mess last week and brought one very simple request: Send money.

The best thing Congress could do to help the city through the crisis, Oscar Goodman testified on the Hill, is free up some cash so Las Vegas can buy foreclosed properties that are blighting neighborhoods.

Congress is entertaining such an offer. Proposals in the House and Senate would allocate from $4 billion to $10 billion to communities hardest hit by the mortgage meltdown.

Republicans, however, are hesitant to push local governments more deeply into the landlord business.

They question whether government, rather than private-sector forces, does the best job of buying, rehabilitating and managing real estate. President Bush is cool to the idea, but he has stopped short of a veto threat.

Goodman told the House Financial Services Committee that when he first took office, blight in a neighborhood meant a broken window. Now blight is defined by tracts of homes where multiple properties are abandoned and in foreclosure.

Las Vegas has seen a threefold increase in foreclosures during the past year, from 20,000 homes in 2006 to 60,000 in 2007, Goodman testified. Half the homes on the market are there because of foreclosure, he said.

Being able to tap funds to scoop up abandoned homes would help turn those neighborhoods around, he said. To fill the houses quickly with residents, the city would offer them as affordable housing, always in high demand in the Las Vegas market.

Goodman told the panel, “I think in some way some good can come out of the bad.”

Congress has been wrestling with the best way to respond to the mortgage crisis since the start of this year, and continues to struggle with a solution that could pass both chambers and get the president’s signature.

Even though the Senate overwhelmingly passed a bipartisan package last week that includes various elements to help builders avert massive losses, community housing groups complained the bill does not go far enough to help homeowners who need immediate assistance.

Senate Majority Leader Harry Reid and Republican Sen. John Ensign supported the Senate plan, which passed 84-12.

Reid was pleased last week to have gotten the bill out of the Senate, but the road ahead remains rough.

The House plan under consideration broadens the aid that would be available to those who need to rewrite their mortgages, and includes $10 billion, rather than $4 billion under the Senate proposal, to be shared among hard-hit communities such as Las Vegas that want to buy properties.

The House is also lining up a vote for early next week on a smaller housing aid bill that includes a plan to give first-time homeowners a tax-free loan of up to $7,500 toward their down payments.

Democratic Rep. Shelley Berkley and Republican Rep. Jon Porter supported the down payment assistance package in committee last week, and they would likely support it if it comes to a full vote on the House floor.

“We need to speed along this help for families in Nevada and nationwide and we need to do it now,” Berkley said in a statement after the committee vote.

Berkley also supports the broader House plan, but Porter and Nevada’s other Republican lawmaker in the House, Rep. Dean Heller, will be asked in coming discussions where they stand on the bill.

Goodman was hopeful last week that “a lot of good could come out of this.”

But at this point, it’s difficult to see a clear end game. Las Vegas homeowners who are in trouble, as well as neighbors who are watching for-sale signs pop up on their streets, may need to hang in there a little longer before aid arrives.