After several months of debate, the North Las Vegas City Council voted against the proposed plan to use eminent domain to assist homeowners who are ‘underwater,’ a phrase meaning the homeowner owes more on their mortgage than their home is worth. The rejected plan would have allowed for the government to “to take over underwater homes, refinance the property and sell it back to the homeowner at current market price,” as stated by Channel 8 News on September 4th.
For many of Las Vegas residents, this news is well taken, as the plan was highly criticized for its potentially harmful impact on the Nevada housing market. Many believe that initiation of the plan would have been both counterintuitive and counter-productive to the progress that Las Vegas, Nevada has made in recuperating its housing market since the onset of our nation’s financial crisis. As stated in a statement made in response to the Council’s decision which was provided by GLVAR President Dave Tina and Nevada Association of REALTORS President Patty Kelley,
"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. <Source: http://www.8newsnow.com/story/23343750/breaking-news-nlv-city-council-rejects-eminent-domain-plan>
This decision, however, is not the end to Las Vegas, Nevada’s search for solutions to assist homeowners who may be in or facing foreclosure, underwater, or both. As provided by Channel 8, “Mayor John Lee said he's talking with state lawmakers to debate ways to fix North Las Vegas' foreclosure problem in the coming months.” In addition, Las Vegas Custom Loans notes the promising impact recent developments in government programs, such as Nevada’s Hardest Hit Fund is expected to have our state. Overall, many are optimistic that we will continue to move towards a trend of improvement.
In addition, it appears that discussions concerning eminent domain do not appear to be over just yet. What needs to be considered is that the plan, as proposed, was initially grounded in purposeful and logical efforts to assist underwater homeowners, and in doing so, the potential effect on the housing market was certainly a consideration. Put simply, the plan was grounded in at least some logic, as opposed to an impetuous effort brought forth by city members attempting to introduce frivolous legislation.
Perhaps in a revised form, and subject to specific limitations, the plan could ultimately benefit the city, but without placing the housing market at risk of harm. In any event, we can likely expect topics of eminent domain to resurface, and mainly for two reasons. First, the Council’s vote does not prevent the eminent domain plan from being introduced to an interim-study committee. Second, a similar bill is expected to be introduced in 2015. Please check back with Las Vegas Custom Loans for future updates on this topic.
If you have any mortgage lending questions,
feel free to contact Casey Moseman