Bank of New York Mellon v. City of Richmond, California et al

Filing 60

Declaration of Brian D. Hershman in Support of 59 Opposition/Response to Motion, for Rule 11 Sanctions filed byU.S. Bank National Association. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G)(Related document(s) 59 ) (Hershman, Brian) (Filed on 11/22/2013)

Exhibit B

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Nevada city rejects eminent domain plan for
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Sep 5 2013

y Jim Christie
AN FRANCISCO (Reuters) - The city council in North Las Vegas, Nevada, on Wednesday rejected a plan to use eminent
~omain if necessary to help refinance "underwater" mortgages, an idea the mortgage industry opposes at a time when
property markets are recovering.
jT'he council voted 5-0 against the plan proposed by Mortgage Resolution Partners (MRP) for a partnership with North Las
buy the mortgages or seize them through eminent domain, a move critics said would unsettle the market for
e ivate-label mortgage-backed securities and push mortgage interest rates up.
City Councilman Wade Wagner questioned the San Francisco investor group's proposed use of eminent domain for
~cquiring delinquent and performing underwater loans. A mortgage is under water when its unpaid balance is more than
rhe market value of its property, a common problem in Nevada's third-largest city.
~egas to

LThey want the performing mortgages they assume will default two, three, four years down the road. That's a mighty big
Lssumption with property values climbing," Wagner told Reuters.
r minent domain allows governments to seize private property for a public purpose.

1

~RP's

plan for North Las Vegas was similar to its plan for Richmond, California, another city hit hard by the mortgage
crisis. But Richmond may back MRP's plan, which has prompted a lawsuit by investors holding mortgages targeted by it. In
~ichmond's case, eminent domain would be invoked in an effort to ward off blight, targeting more than 600 mortgages to
event borrowers from defaulting on them, according to its leaders.
RP has proposed that eminent domain can be used if holders of underwater mortgages do not sell them to cities at a
scount pegged to their properties' current value. Then the loans can be refinanced and made less costly for their
1
borrowers. MRP says.
a report for North Las Vegas, MRP said the city risks 2,500 foreclosures from underwater mortgages in private-label
~ortgage securities and offered to help acquire and refinance loans from a group of more than 3,900 mortgages.
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~RP says it aims to help housing markets, but critics point out it could earn $4,500 for each mortgage its refinances.
t .arlier this year, San Bernardino County, California, and the cities of Fontana and Ontario, declined a tie-up with MRP
f!tter lobbying by financial institutions and local businesses.
lA. rebound in the housing market also helped block MRP in San Bernardino County, said Paul Herrera, an official with the
!Inland Valleys Association of Realtors: "That really destroyed the argument that the housing market could only recover with
~rastic action."
jThe median sales price for a home in California's Inland Empire - San Bernardino and Riverside counties- rose 31 percent
to $262,000 at the end of the three-month period ended in June from the same period a year earlier. Herrera said.

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prices in North Las Vegas are also up. The median sales pri ce for all residential properties in the city rose 23
I
percent to $142,500 from May through July from the same period a year earlier. according to online real estate
marketplace Trulia.
lin Richmond, investors holding mortgages targeted by the city are pressing a lawsuit through trustees Wells Fargo & Co
~nd Deutsche Bank AG to block the city from implementing MRP's plan, which they say would make an illegal application
f f eminent domain.
he plan has also drawn fire from the Federal Housing Finance Agency, which has warned it would direct Fannie Mae and
reddie Mac to "limit, restrict or cease business activities" where eminent domain is used to seize mortgages.
Editing by Ken Wills)

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