Candidate for governor crafts foreclosure-prevention plan

Republican Mike Montandon says he has an idea to reduce foreclosure in Nevada, a state suffering mightily from the crash of residential real estate.

Montandon's plan, released today, is called Foreclosure Avoidance and Stabilization Today Program, or FAST. According to Montandon, it works like this: 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 zero-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.

Montandon, former mayor of North Las Vegas, is trailing Republicans Brian Sandoval and incumbent Jim Gibbons in statewide polls for the Republican nomination.

Clark County Commission Chairman Rory Reid is the only Democrat on the ticket.