A proposal by a consulting firm that the City of North Las Vegas consider using eminent domain to seize mortgage notes and restructure them to help underwater homeowners has stirred up controversy.

While some advocacy groups are supporting the provision, the real estate industry, property owners, and some City Council members see it as a property rights issue.

"From our observation, there is no overwhelming support for it," said Abran Vigil, a partner with Ballard Spahr in Las Vegas. The problem, he said, is that it’s unclear how the plan would actually work or how it would be funded.

"They would have to gain access to some money from somewhere in order to exercise this power of eminent domain and give just compensation to the mortgage holder," Mr. Vigil said. "Where the money comes from is really up in the air."

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Distressed Real Estate
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