More than eight months after entering into a highly controversial and contentious agreement with Mortgage Resolution Partners, LLC (MRP) to bail out underwater home owners with eminent domain mortgage seizures, the Richmond City Council will finally implement the controversial program starting at sunrise tomorrow morning. A fleet of hand-picked process servers, fueled with free coffee provided by Catahoula, will fan out from Richmond City Hall at exactly 7:00 AM Tuesday morning to serve legal papers on the various banks servicing underwater “zombie” mortgages in Richmond.

Steven M. Gluckstern, Executive Chairman & Acting CEO,  Mortgage Resolution Partners LLC, which is providing the funding to purchase the seized underwater mortgages, broke a five -month-long silence, “ We should be turning these mortgages around by the end of the week.” Gluckstern went on to explain how the program works:
With a lineup of investors ready to go, MRP’s goal is straightforward. For a home that was bought, say, for $400,000 with a $300,000 mortgage seven years ago, and which is worth only $200,000 today, MRP will find a buyer to sell the mortgage to at fair market value, say $160,000.
This enables the homeowner to refinance the mortgage, say, for $190,000, creating a win for the investors, homeowners and the city. As banks clear their books of the zombie mortgages, MRP collects a fee of $4,500 for every mortgage it helps refinance — making it a game-changer for everyone involved.
“Wells Fargo is not going to buckle to a small grassroots movement,” says Steven Gluckstern, MRP’s co-founder and executive chairman, but “on the other hand, if someone shows up with money and government power, that’s a whole other story.” Gluckstern, who worked with Warren Buffet and oversaw hundreds of billions of dollars during his tenure at Zurich Financial Services, served on President Barack Obama’s original finance committee and was founding chairman of the progressive donor group Democracy Alliance.

Starting tomorrow, Richmond will seize over 600 mortgages in both upscale and economically challenged neighborhoods

Mayor Gayle McLaughlin, along with “Team Richmond,” in a hastily called press conference at the Bobby Bowens Progressive Center at 1021 Macdonald, gloated, “We are the RPA, and we are here to help you! You can expect underwater mortgage seizures to begin as early as tomorrow.”

The ecstatic mayor, who has parlayed her role in the eminent domain scheme to national prominence, was immediately mobbed by the press seeking more details following the initial announcement. Standing by the mayor’s side was Amy Schur of Alliance of Californians for Community Empowerment (ACCE). “Without McLaughlin, this could never have happened,” said Schur, quoting from an article, “Activists to Watch: Amy Schur,” by Bill Moyers:
The campaign in Richmond is driving Wall Street crazy. Major banks including Wells Fargo and money management firms including PIMCO and Blackrock have poured enormous resources into lobbying, lawsuits and media campaigns to block the city’s plans. They know that more than 10 million American homeowners are drowning with underwater mortgages and that Richmond is only one of many “hot spots.” In 2013, even as home prices began to rise in some parts of the country, the recovery bypassed these areas. If Schur, ACCE and their allies are able to defy Wall Street in Richmond, the idea will spread quickly to other cities. ”We hope our city provides a model for other cities,” says Richmond Mayor Gayle McLaughlin, “and that this becomes a national movement.”
Michael Levitin from Occupy.com was also there and added to the praise of McLaughlin:
Mayor Gayle McLaughlin, who is the face of Richmond’s fight to keep residents in their homes, says each foreclosure impacts the value of nine homes around it and costs the city tens of thousands of dollars in fees. Meanwhile, real estate prices drop, blight and crime increase, and the economy sinks as people cut back spending on basic needs in order to pay bloated mortgages.
The city didn’t want to have to use eminent domain, says McLaughlin, who last year marched with community organizations to the city's head branch of Wells Fargo to ask if the bank would voluntarily renegotiate underwater loans at fair market value, known as principal reduction.
But bank officials refused to meet with them; Wells Fargo and other financial institutions continue to play what McLaughlin calls an obstructionist role, standing in the way of vital reforms. “We asked them, ‘What is your solution to fix the problem?’ and they had none,” McLaughlin says, so “we’re stepping in to right a wrong and to prevent further devastation. We can’t just let Wall Street trample on us and our communities — we have to stand up.”
Finally, Ellen Brown, who wrote the following in Web of Debt, stepped up to the podium:

Gayle McLaughlin, the bold mayor of Richmond, California, has gone where no woman dared go before, threatening to take underwater mortgages by eminent domain from Wall Street banks and renegotiate them on behalf of beleaguered homeowners. A member of the Green Party, which takes no corporate campaign money, she proved her mettle standing up to Chevron, which dominates the Richmond landscape.

Team Richmond announces implementation of eminent domain actions to save underwater homeowners

This was a stunning development that, like a 7.0 California earthquake, shook Wall Street to its foundations. How did it come together so quickly? Here is the fast-breaking story from the inside, a story that only the E-FORUM can tell.

The Township Council of Irvington, an obscure New Jersey village of 53,000 with 1,800 homes underwater, voted earlier this week to link up with Richmond to form a Joint Powers Authority (JPA) to seize mortgages through eminent domain, thus providing the critical collaboration to move forward. See http://www.nj.com/essex/index.ssf/2013/11/eminent_domain_to_fight_foreclosures_is_divisive.html.

You may recall that back in July of 2013, the Richmond City Council was able to muster four votes (Butt, Beckles, McLaughlin and Myrick) to enter into the agreement with MRP, but the remaining three councilmembers (Booze, Bates and Rogers) made it clear they not only opposed the plan but would not provide the critical fifth vote (supermajority) required to actually initiate an eminent domain action.

Not discouraged by the standoff, Mayor McLaughlin cobbled together a creative and brilliant work-around that has finally come to fruition. The plan was to recruit at least one more city and then create a JPA (Joint Powers Authority) whose hand-picked and sympathetic board members presumably could muster the super majority required to initiate an eminent domain action, thus bypassing the need for a supermajority on the Richmond City Council. Creation of the JPA and appointment of its members requires only four votes, not a supermajority.

It’s simple math,” explained McLaughlin, “As a former teacher, I know how powerful math can be. Because of its foundation in logic, math always trumps politics.”

With Irvington on board, McLaughlin moved at flank speed, calling a special closed session meeting of the City Council over the past weekend to set up the JPA and begin mortgage seizures. City Attorney Bruce Goodmiller defended the action, opining, “All this can be done in secret under the Brown Act because real estate negotiations and litigation matters are exempt from public scrutiny.”

As mayor, McLaughlin quickly appointed herself and Jovanka Beckles as Richmond’s board members on the new JPA, named RIPCORD (Richmond-Irvington Partnership Coordinated Offensive to Restore Dignity). In Irvington, Mayor Wayne Smith appointed himself and Vice-mayor Andrea C. McElroy as Irvington’s JPA board members. The board met via Skype on Sunday night, approved the charter and board membership of the JPA and also approved the first round of seizures in both Richmond and Irvington.

Some logistical details of future meetings are yet to be worked out, because, like a bicoastal romance, the JPA board members will have to travel at some point to conduct business. The mayor’s travel budget is running low this fiscal year due to international travel, so she recommended saving money by meeting exactly half way between Richmond and Irvington, which happens to be in Deadwood, South Dakota. Not exactly a tourist destination, but no one could accuse the board members of combining pleasure with work at a location like that. The average low temperature, even in March is -2o F.

No one really expected the eminent domain program to be implemented so soon, but once the lynchpin was inserted, there was no stopping it.

When he heard about the latest developments, Nat Bates went literally ballistic. He launched himself out of his chair and headed for the door. “No way is this legal; if the city attorney can’t stop it, I will go directly to the president. You may recall I attended the Obama’s Christmas Party, and he gave me his personal cell phone number and told me to call in case of emergency.”

“That time has come,” grimaced Bates.

Nat Bates and President Obama, Christmas 2013

While Nat fumed, Corky reached out directly to his constituents over the airwaves. “You people watching from home, listen carefully to what I have to say. Now is the time to rally and put an end to this RPA nonsense.”

“If you think this is going to help my people on the southside, you are smoking more than medical marijuana. These mortgage seizures are only going to help the mayor’s supporters and RPA members, and they don’t look like you and me. Well some of them may look like Jovanka Beckles, but we all know she is just a phony Latina masquerading as a black person.”

Then Booze launched into a 30-minute rant about some unrelated issue, and the mayor tried unsuccessfully to gavel him down. Finally Beckles made a motion to end debate, but Rogers and Myrick refused to support it, so Booze went on for another 30 minutes until he finally had to go to the bathroom and stood down..

Jovanka, who grew up in Panama and speaks fluent Spanish, is not one to let an insult stand. She fired back, “Corky, the only foreign country you ever visited, before the City bought you a free ticket to China, was the Peoples’ Republic of Berkeley. And the only foreign language you speak is Ebonics.”

Jael Myrick asked if the seizures would exclude the million dollar Point Richmond homes that are underwater and just concentrate on the Iron Triangle. “I’m afraid not,” said the mayor. “I really wanted to do that, but I was advised by ACCE legal counsel that showing favoritism for poor people would invite legal challenges.” 

“In any event,” said the mayor, “ rich people pay more taxes than poor people, and the magnitude of their underwaterness is huge compared to the less fortunate. We have to show compassion for all.”

Jim Rogers was wracked with indecision, trying to find a way to tweak the legislation in a way that would not offend one of his campaign donors but at the same time appear sympathetic to the aggrieved homeowners. He offered a friendly amendment, “ For every million dollar home, we will save five lower value homes, all of which will be chosen by lottery, and the lottery will be conducted by an ad hoc committee of the City Council, chosen for economic and ethnic diversity to ensure absolute fairness.” The mayor declined the amendment offer, and when Rogers put it in the form of a motion, it died for lack of a second.

Map of underwater property locations in Richmond that will be targeted by mortgage seizures

At the end of the day, the City Council took a divided vote that mirrored earlier decisions on eminent domain. The vote was 4-3, with Bates, Booze and Rogers dissenting.

Realtor Jeff Wright, who led the fight locally against eminent domain, was taken by surprise. “I thought we had licked this scourge,” he said,” I’ll have to go back to Wall Street and get more money to continue the fight.” “They may have won this round, but we will bankrupt the City of Richmond before we let this stand.”

Wright continued, “We will fight it in court, and we will fight it at the ballot box.” “When we get through with the RPA, they will be toast.”

Mike Parker, RPA spokesman and (“Team Richmond”) mayoral candidate, reminded Wright, “You may recall that Richmond has been sued unsuccessfully several times by big banks, but so far the score is Richmond 4, banksters 0. Good Luck, Jeff.”

Above, Realtor Jeff Wright, formerly head of the West Contra Costa Association of Realtors
Below, mailers distributed by West Contra Costa Association of Realtors and paid for by Wall Street

As for me, I wish you a happy April Fool’s Day!