As Nevada citizens are well aware, an awful lot of really bad liberal public policy ideas come out of our neighboring state to the west. Indeed, they don’t call California the “land of fruits and nuts” for nuthin’.
So it will come as no surprise that a really bad scheme to abuse the government’s very limited, very specific powers of eminent domain is seeping across the Golden State border and trying to gain a foothold in the Silver State.
The scheme was initially dubbed the Community Resolution Assistance Program (C.R.A.P.) by Byron Georgiou, a partner in the California company, Mortgage Resolution Partners (MRP), which is currently peddling the scheme to the city of North Las Vegas. And if NLV buys into the program, this C.R.A.P. could spread all across our state…and eventually take over the world!
OK, that last part was thrown in for dramatic effect. But the threat is real; made more so because the scheme just sounds soooo good…as long as you don’t bother to look too deeply into the details or care about the Constitution.
In layman’s terms, the Founding Fathers extended the power of eminent domain – the power to “take” your property for a public purpose, such as building a school or highway – to local governments so long as the property owner was fairly compensated. MRP is selling C.R.A.P. to local governments as a way to alleviate their home foreclosure problems, arguing that’s an acceptable public purpose.
In a nutshell, the government would use its eminent domain power to seize the mortgages of homeowners who are current on their payments but who are “underwater” on the value of their homes. The current mortgage holders would be paid just a fraction of what they’re owed, maybe less than 50 cents on the dollar.
Georgiou’s vulture capitalists would then try to get the homeowners a new loan at current market value, pocketing the difference from the amount the city seized the loan for. If successful, MRP would “earn” a tidy $4,500 fee just for being the middle man…while the city gets a little “vig” on the side for its trouble.
Two problems: First, the lenders who hold the current loans – the actual “property” in question, not the home itself – would get the royal shaft, not fair compensation.” And secondly, there’s no guarantee the home owner will be able to secure a new loan…meaning they’d lose their home and be C.R.A.P. out of luck!
Cities around the country are being told this is a risk-free, no-cost way for local governments to do “something” about their foreclosure problems. But as the sayings go, the devil’s in the details, and if it’s too good to be true…
Nevadans should tell California we’re not gonna to take this C.R.A.P.