LAS VEGAS (KSNV MyNews3) — There’s a plan being formulated by the state to help homeowners and save their underwater homes, but it needs funding and approval from the Legislature.
With so many houses underwater, perhaps hundreds of thousands, an effort is underway to start a program that would offer assistance to between 700 to 800 homes in Clark and Washoe counties initially.
Bruce Breslow, director of Business and Industry for the state explains how it would work.
“Our goal is to buy mortgages from the FHA at a discount and try to refinance the people in those homes back to market value of their homes, forgive the underwater portion in order to keep them from becoming a blight on the community in the future,” Breslow said.
For now, Breslow said homeowners would not apply, but rather the federal government would provide a list of addresses. The goal would be finding those who are making an effort to make mortgage payments and would be willing to stay in their neighborhoods.
“The beauty of it is once we get people back into their houses their payments will come into the program and if we have to sell the home to owner-occupants, that money will come back into the program to buy more mortgages,” Breslow said.
Real estate attorney Tara Newberry says she’s not so sure this is the best way to approach the problem.
“Apparently it is 700 to 800 homes that they are looking at purchasing, which in comparison to the hundreds of thousands of homes that are still underwater in the state of Nevada; I don't see that it is going to make any significant impact to right the market,” Newberry said.
She suggests another solution.
“I think if more short sales are done that is probably going to be the best way for us to stabilize the market quickly and with the least out-of-pocket expenses for both sides,” Newberry said.
The plan is already being discussed in Carson City in committee. Assemblywoman Lucy Flores says there are still a lot of questions.
“We don't want this to be a program that goes through very quickly and ultimately it's a lot of money that doesn't help a whole lot of people,” Flores said.
But Breslow says the market has to stabilize somehow and this is a first step.
Under the current proposal, $49 million for the program would come from mortgage settlement funds the state received months ago and $100 million would come from the federal government.
If approved by state lawmakers, the program could get underway as early as July.