Subcommittee approves $150 million foreclosure-rescue program
May 9, 2013
A subcommittee of the Senate Finance and Assembly Ways and Means committees Wednesday approved a $149 million program designed to help rescue underwater homeowners from foreclosure.
The Nevada Home Retention Program would be funded by a $49 million transfer of mortgage-settlement funds from the Attorney General's Office to the Department of Business and Industry. The Real Estate Division would use the cash, matched by $100 million from the U.S. Treasury, to create a program that officials say is designed to address the estimated 52,000 delinquent home mortgages headed toward foreclosure in Nevada.
The program's goal is "to stabilize home ownership and neighborhoods and return home mortgages to current market value," the plan states.
It would do that by creating a nonprofit corporation that would use the money to buy mortgages that are 90-180 days delinquent from government-sponsored entities such as the FHA, commercial and state-chartered banks, and credit unions. The plan is to buy those mortgages at 70 percent of current market value, modify the loans to a more realistic value and issue new mortgages to existing or new owners that they can afford to pay. Those new mortgages would be set at 120 percent of current market value to encourage the owners to rebuild their credit to the point where they can refinance at market value. If they can do so, the added 20 percent would be forgiven and written off.
When they can refinance, the money goes back into the program.
"Renegotiating mortgages to refinance the home at current market value and interest rate gives the homeowner the opportunity to start building equity," according to the Business and Industry plan.
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The plan is to assist nearly 4,600 homeowners over the next seven years.
B&I Director Bruce Breslow said the key, however, is getting banks and other institutions to sell mortgages to the program.
"We can't buy mortgages unless somebody is willing to sell them," he said.
The plan still must be approved by the full Finance and Ways and Means committees.