On August 11,2013 the Las Vegas Review- Journal published an editorial titled: “Bring pain to eminent domain”.
This Op-ed was an extremely biased condemnation of using eminent domain to rescue underwater homeowners with Private Label Securitized loans (PLSL), a specialized type of loan existing in North Las Vegas,and many other hard hit U.S. cities.
Based on the R-J’s editorial, one has to wonder whether the R-J’s business model has morphed into investment banking and real estate. The Journal certainly is making no friends among troubled homeowners, or reeling communities hard hit by the U.S. housing crisis.
In its editorial, the R-J takes sides with well funded,lawyer heeled, powerful investment banking and real estate interests, while stigmatizing a highly legitimate eminent domain plan to rescue underwater homeowners, eliminate neighborhood blight,and prevent more vacant homes, overgrown yards,and increased crime in North Las Vegas.
North Las Vegas suffered devastating financial consequences in recent years, living at” ground zero”in the housing crisis. Countless residents were uprooted from their homes, resulting from an economic collapse with the unrelenting instincts of a shark in bloody waters. Now the R-J rides the shark’s back,with a blistering attack on a sensible plan to reduce homeowner distress,and help restore a community,and bring hope to those underwater homeowners with PLSL loans.
Approximately 3,000-4,000 PLSL loans exist in North Las Vegas. These are investor backed loans,which because of their complex multi investor make up,are nearly impossible to restructure or refinance. Consequently,these loans carry a much greater risk of default, threatening homeowners with foreclosure, and the loss of their homes. Investors in turn are at risk for substantial default costs.
One troubling aspect of the R-J’s op-ed, is the reference to threats by Fannie Mae and Freddie Mac to withdraw their substantial financial support from any community which uses eminent domain to buy-out these PLSL loans.
Fannie and Freddie,the two quasi-governmental financial giants, had both heavily backed the low quality, sub prime mortgage market, which led to both institutions holding highly distressed portfolios, which in turn contributed to the housing market collapse, saddling taxpayers with billions in bailouts and helping to devastate the entire U.S. financial market. It would, therefore, be highly cruel and tasteless for Fannie and Freddie to now undermine many of the very underwater homeowners that they were instrumental in creating in the first place.
It is hoped the North Las Vegas City Council carefully considers this unique and innovative approach to the City’s underwater PLSL mortgage market, carefully examines its independent legal opinion on the use of eminent domain,and then makes a sensible decision. This notwithstanding, the highly negative and false messaging circulating in flyers being mailed in the City by banking and real estate investor interests, who are attempting to evade the consequences of risks arising from their own personal investment decisions.