The city of North Las Vegas has entered into an advisory agreement with Mortgage Resolution Partners. This entity promotes the concept of local governments using the power of eminent domain to seize underwater mortgages from investors for the purpose of restructuring them.
In response the Securities Industry and Financial Markets Association, the Association of Mortgage Investors, the Greater Las Vegas Association of Realtors and the Nevada Bankers Association issued the following joint statement:
"We’re disappointed the City Council of North Las Vegas has entered into an advisory agreement with Mortgage Resolution Partners. While this agreement does not make it a certainty that the city will use eminent domain, today’s step brings the city closer to embracing an unconstitutional scheme to seize mortgages from people who are paying their monthly payments that will only hurt the broader community. In addition to adding unprecedented and unpredictable risk factors into the local housing market and likely cutting off needed credit to the community, the proposal will take money out of the pockets of everyday investors and pension holders and put it in the hands of a small group of private investors backing MRP’s scheme.”
North Las Vegas is the latest in a series of local governments considering this extreme move. On July 1, a new North Las Vegas city council will take over and the securitization groups are planning to meet up with new members to reconsider the agreement and exercise its right not to proceed.