Richmond mayor, protesters turned away at Wells Fargo headquarters in San Francisco
By Robert Rogers
Contra Costa Times
Posted: 08/15/2013 01:00:56 PM PDT | Updated: about 10 hours ago
SAN FRANCISCO -- Richmond Mayor Gayle McLaughlin and more than 40 protesters were turned away from Wells Fargo corporate headquarters Thursday after demanding to speak to top officials of the banking giant about its lawsuit against the city.
McLaughlin, 61, was undaunted after bank officials denied her request to speak to CEO John Stumpf and locked the front door. She said the city will not be dissuaded from its plan to use eminent domain to seize underwater mortgages.
"I am absolutely not backing down," McLaughlin said.
On July 31, Richmond became the first city in the country to partner with San Francisco-based investment firm Mortgage Resolution Partners on a plan to compel banks to surrender mortgages
Richmond Mayor Gayle McLaughlin and supporters visit Wells Fargo headquarters in San Francisco Thursday to demand the bank drop legal action against the city on behalf of investors to block the city's plan to use eminent domain to seize underwater mortgages. (Robert Rogers/Staff)
where the loan amount exceeds the value of the home. The plan would allow the firm to refinance the loans under terms the homeowners can afford.
The city had threatened to use eminent domain to seize 624 underwater mortgages if lenders did not agree to sell them the loans by Aug. 14.
Wells Fargo and Deutsche Bank responded by filing suit on behalf of investors seeking a preliminary injunction against the city and the investment firm. The banks' lawsuit said Richmond's plan is unconstitutional on numerous points and violates the just-compensation requirements of the "takings" clause of the U.S. and California constitutions.
"The program is a for-profit scheme that proposes seizing performing mortgage loans at fractions of their unpaid principal balance, prices that are below the fair market value for even loans that are in default," the lawsuit reads.
Wells Fargo spokesman Ruben Pulido issued a statement Thursday saying that "in its role as either servicer or as trustee, (Wells Fargo) does not have the contractual authority to sell the loans that the city of Richmond has sought to purchase and believes the threatened use of the power of eminent domain to acquire the loans raises significant and troubling constitutional and other issues."
McLaughlin, the nation's only Green Party mayor of a city of more than 100,000 residents, defended Richmond's unprecedented attempt to slash underwater home loans. Citing studies by the Alliance of Californians for Community Empowerment, McLaughlin said more than 40 percent of mortgages remain underwater in the city.
She said the plan was "a proper use" of eminent domain because it seeks to stabilize neighborhoods.
"For Wells Fargo to be suing us is outrageous," McLaughlin said after marching down Montgomery Street with dozens of supporters. "We just want them to cooperate with our efforts to save our communities."
The midday demonstration attracted dozens of onlookers and slowed traffic in the busy financial district.
When officials in business suits briefly opened the high-rise building's glass doors, McLaughlin slipped a letter inside. The letter, addressed to Stumpf, implored the banking executive to tour Richmond with her and "see the reality we have to deal with every day."
Pulido said the bank locks doors during protests "in order to protect the safety of our customers and team members."
Leonard Desmuke, a Richmond homeowner who attended the rally, said he backs the city's efforts. Desmuke said he has a mortgage of more than $700,000 on a home valued at $365,000.
"The federal government bailed out the banks but did nothing for the individual homeowners," Desmuke said.
Pulido said Wells Fargo has actively worked with borrowers to stem the foreclosure tide by adjusting loans for more than 870,000 customers and forgiving $7 billion through principal reductions since 2009.
Contact Robert Rogers at 510-262-2726. Follow him at Twitter.com/roberthrogers.
Aug 15, 2013, 2:51pm PDT Updated: Aug 15, 2013, 5:38pm PDT
Wells Fargo locks out Richmond mayor at San Francisco headquarters
Richmond Mayor Gayle McLaughlin found the doors locked at Wells Fargo's San Francisco headquarters Thursday. She was seeking a meeting with Wells CEO John Stumpf over the bank's lawsuit against the California city over its planned use of eminent domain to fight foreclosure blight.
Senior Reporter- San Francisco Business Times
Wells Fargo locked its San Francisco headquarters branch at noon Thursday when Richmond Mayor Gayle McLaughlin and fellow protesters arrived to speak with CEO John Stumpf over the bank's lawsuit fighting the California city's plans to use eminent domain to seize underwater mortgages.
Wells Fargo filed suit last week against Richmond in its role as a bond trustee, representing investors holding the securities backed by the Richmond mortgages. The bank argues that Richmond's plan to use eminent domain in this fashion is "unconstitutional."
As McLaughlin stood before Wells Fargo's locked doors today, she captured the frustration many feel today about the foreclosure crisis that persists even as San Francisco and other markets see a recovery in home prices.
"Nothing has been done for the last five years or more. A fix is needed," she said. When a reporter asked whether the former school teacher, who was elected in 2006, ever thought she'd be taking on Wells Fargo, McLaughlin responded, "I feel right at home here with my community. I'm committed to taking a stand."
She also said that almost 70 percent of Richmond residents are members of minority groups that were targeted with so-called predatory loans.
Attending today's protest was Richmond homeowner Leonard Desmuke, who is current on his underwater mortgage but hopes to benefit from Richmond's plans to buy mortgages like his for less than today's face value of the underlying property. The city and its financial partner, San Francisco-based Mortgage Resolution Partners, would then refinance the loan at a much lower
Mark Calvey covers banking and finance for the San Francisco Business Times.