Richmond, CA Eminent Domain Battle Expanding

On December 8, SFGate published an article titled Richmond Mortgage Eminent Domain Battle Expanding.

Richmond mortgage eminent domain battle expanding

For Patti and Robert Castillo of Richmond, using eminent domain to prevent foreclosures boils down to a simple reality.

“We are living paycheck to paycheck just to pay the mortgage,” Patti Castillo said. Reducing their principal through eminent domain “would help keep money in our pockets and let us stay in our house.”

Their mortgage on a modest house now worth half of the $420,000 they paid for it in 2005 is among 624 home loans that the city of Richmond has threatened to seize via eminent domain in an effort to restructure them to be more affordable.

While homeowners like the Castillos welcome the idea, the banking industry loathes the idea of municipalities forcibly seizing mortgages and is vigorously fighting the effort. Last week, the American Civil Liberties Union filed a lawsuit against the nation’s top housing regulator, seeking information on whether it’s been unduly influenced by the banking industry.

The Federal Housing Finance Agency in August threatened possible legal action against localities that pursue eminent domain for mortgages, and said it might bar Fannie Mae and Freddie Mac from backing new home loans in those areas.

Now the ACLU’s lawsuit seeks to uncover “the nature of (the FHFA’s) relationship with the financial industry,” said Linda Lye, a staff attorney at the ACLU of Northern California. “Its unusual and very aggressive stance raises potential questions of governmental integrity.”

An FHFA representative declined to comment.

The eminent domain plan, in which cities would forcibly acquire mortgages at discounts, then help homeowners refinance into smaller, more affordable home loans, is at heart a form of principal reduction, Lye said.

“Principal reduction is very mainstream; there have been calls for it from entities including the secretary of the Treasury,” she said. “Communities like Richmond particularly interested in principal reduction are disproportionately minority. The FHFA should be treading very carefully and looking at whether its conduct has an extra impact on communities of color. The general concern is that they would be effectively red-lined.”

Banks filed lawsuits in August seeking to stop Richmond from mortgage seizures, but a federal judge dismissed them as premature. Richmond is the city furthest along in pursuing eminent domain for mortgages, but remains one City Council vote short of the supermajority needed to exert that municipal authority.

However, if Richmond or another city exercises eminent domain for mortgages, banks have signaled that they will rush to court seeking an injunction.

Growing interest
And banks may soon have other cities to fend off.

The City Council in Newark, N.J., last week unanimously voted to study eminent domain for mortgages. That followed a November move by fellow New Jersey town Irvington to conduct a similar study.

Steven Gluckstern, founder and chairman of Mortgage Resolution Partners, the private San Francisco firm that is providing funding and advice on Richmond’s eminent domain quest, said MRP does not have a formal relationship with those cities but is sharing information with them about how the plan would work.

“These efforts are bubbling up from the grass roots,” he said.

Several other California towns, including El Monte, Baldwin Park and Pomona (all in Los Angeles County), are considering the idea, he said.

A polarizing issue
However, both financial and political pressures continue to mount. In August, Richmond failed to find buyers when it tried to refinance some municipal bonds, an unusual snub that experts said was related to its eminent domain quest. Richmond will return to market with those bonds in January, said City Manager Bill Lindsay.

“The eminent domain program doesn’t affect our credit-worthiness or ability to pay debt service, but the fact that there are headlines about it makes it more expensive for us to borrow money.”

The expected cost of a higher interest rate is likely to be slightly more than $1 million over the 15-year span of the bond, he said. About a quarter of that would impact the city’s general fund; the rest affects various agencies.

Richmond sold $12.1 million of annual tax revenue anticipation notes, a standard way that cities get cash flow for operating expenses, on Wall Street last week. The city’s financial adviser said about $13,000 in additional interest costs might have been caused by “other factors including the headline risk associated with the mortgage risk reduction program,” Lindsay said.

In moves that could presage a congressional showdown, four U.S. senators last month wrote a strongly worded letter asking the administration to oppose mortgage seizures, while 10 U.S. representatives wrote letters supporting the plan.

Eminent domain for mortgages could “scare off private capital, dry up new mortgage credit, and harm investors and taxpayers,” said the opposition letter from senators Pat Toomey, R-Pa., John Boozman, R-Ark., Mark Begich, D-Alaska, and Heidi Heitkamp, D-N.D. “We are prepared to pursue a legislative solution.”

The support letter raised similar points as the ACLU lawsuit, saying refusal by government agencies to insure loans changed by eminent domain would constitute discrimination.

Meanwhile, for the Castillo family, staying put carries extra urgency, as their 24-year-old son, Leon, is severely autistic. Renting was difficult, with neighbors complaining about his vocal outbursts.

They can just swing the mortgage with Robert’s income as a diesel mechanic and the money Patti gets from In-Home Supportive Services for caring for Leon.

After seeing five neighbors lose their homes to foreclosure in recent years, the Castillos hope the city’s plan will work for them.

“If eminent domain doesn’t go through, we’re not going to be able to stay here,” Patti Castillo said. “We already feel the stress of raising a child with special needs. Losing our house would ruin our credit, and we’d lose our down payment. It would benefit Richmond to help keep people in their homes.”

Please click here to view the online article.

About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders,  and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.

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CHIEF EXECUTIVE OFFICER

Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.

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Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.

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CHIEF INFORMATION OFFICER

George Mehok

George Mehok is the chief information officer for Safeguard. He is responsible for all strategic technology decisions, new systems deployments and data center operations supporting a national network of more than 10,000 mobile workers.

George has more than 20 years of leadership experience dedicated to high-growth companies in the mobile telecommunications and financial services industries, spanning startups to global industry leaders.

George played a senior role in the formation of Verizon Wireless, leading the IT product development and strategic planning team. He led the integration planning for the Verizon merger including: GTE, Vodafone-AirTouch, Bell Atlantic Mobile and PrimeCo.

As chief information officer at Revol Wireless, a VC-backed CDMA wireless communications network operator, George’s team implemented an integrated technology infrastructure and award-winning business intelligence platform.

George holds a bachelor’s degree in political science and economics from Eastern Michigan University and an M.B.A. from The Ohio State University. He is a board member of Akron University’s School of Business Center for Information Technology, in addition to an advisory board member for OHTec.

In 2013, George won the Crain’s Cleveland Business CIO of the Year award for his team’s work in completing a major acquisition and technology transformation at Safeguard. In 2015, George’s team was recognized by InformationWeek’s annual Elite 100 ranking of the most innovative U.S.-based users of business technology. The mobile inspection technology developed at Safeguard was selected as InformationWeek’s “One of the top 20 ideas to steal in 2015”.

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General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.

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AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.

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AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.

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AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.

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AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.

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AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.

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Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.