(Montandon for Governor campaign) – Republican Nevada Gubernatorial candidate and former Mayor of North Las Vegas Mike Montandon announced on Thursday a unique commonsense conservative plan to prevent home foreclosures and stabilize the State’s housing market. The Foreclosure Avoidance and Stabilization Today Program (FAST Program) utilizes a private insurance policy combined with a state government backed loan protection plan to address the current economic crisis in Nevada’s housing market.
This plan will also provide an urgent solution to prevent further deterioration in the State’s housing market. Foreclosures affect all Nevadans and failing to prevent foreclosures detrimentally impacts the values of all homes in Nevada.
Nevada faces many economic challenges that require Nevada State leaders to develop solutions to the State foreclosure problem. Nevada leads the Nation in foreclosures with an annual foreclosure rate 3.5 times the national average. Since the time when home prices peaked, home values in Las Vegas have decreased over 47% and home values throughout the state continue to decrease as foreclosures destabilize the market.
Without a market stabilization program home values will continue to decrease by the high number of option ARMs due to reset this year through 2011. Our State economic crisis created by the collapse of the housing market will only intensify in the future without a solution to Nevada’s needs.
When the housing market collapsed both banks and homeowners were left twisting in the wind until Congress got involved and bailed out the banks, leaving homeowners to fight for themselves. Congress’s unfair bailout compels Nevada to provide a solution to our regional needs. Montandon’s FAST Program is a solution that paves the way for responsible homeowners to find the relief necessary to prevent the further erosion of home values in Nevada.
Montandon states: “The United States Constitution was written to constrain and limit the Federal Government’s powers; the document’s genius is that by not rendering the federal government certain powers, individuals and communities would be empowered to work out their own solutions based on their appropriate needs.”
Montandon further quotes the 2008 Republican platform which reads: “Republicans will uphold and defend our party’s core principles: Constrain the federal government to its legitimate constitutional functions . . . Unleash the power of enterprise, innovation, civic energy and the American spirit-and never pretend that government is a substitute for family or community.”
Nevada has some of the worst statistics in the nation for unemployment, foreclosures and declining home values, which is why Montandon believes that only a state solution can address the State’s unique problems and allows Nevada to become a National leader in conservative solutions to these problems.
FAST combines federalist ideals and common sense conservative principles to provide a solution where Nevadan’s can avoid foreclosure and protect the values of their homes and the values of the homes in their neighborhood. As ARM loans readjust homeowners are unable to refinance due to the homes negative equity.
The current system fails to recognize the real problems facing homeowners; banks are unwilling to talk with homeowners until the home is in default, and even after default banks lack a financial solution to address the current market realities. Banks are unable to refinance the loan because the current market value of the home is less than the amount owed on the first loan. FAST encourages banks to work with homeowners through a private mortgage insurance backed through the full faith and credit of the State of Nevada.
FAST provides a government-backed guarantee on a portion of the loan that is unsecured by the market value of the home. Suppose that a home was purchased for $300,000 in 2005 on a 5-Year 0-Interest ARM, this summer the 5-year arm readjusts and the homeowner is unable to make the new payments. The home is now worth $200,000, and to refinance the bank will only make a loan on the value of the home, so the homeowner will have to come up with $100,000 to satisfy the original loan.
Many Nevadans faced with this common scenario are forced into foreclosure. In this example, FAST would provide a guarantee on the $100,000 and provide a path for homeowners to refinance their home and protect the value of their neighbor’s homes by preventing foreclosure.
FAST is funded through private insurance premiums paid by participating homeowners in their loan closing costs and is not a taxpayer-subsidized program. Homeowners electing to save their home through FAST will pay an insurance premium used to satisfy the gap loan in the event that a homeowner forecloses on a FAST secured home. Nevada can protect the State’s housing market by preventing foreclosures from driving down the value of all homes in the state.
Historically, people purchased their home as a place to live not as an investment. FAST embodies the Nevadan ideal that people do not just walk away from their obligations they are “battle born” to fight to do what is right.