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Richmond, CA Moves Forward With Eminent Domain Plan

On September 11, MortgageOrb.com published an article titled Richmond Moves Forward With Eminent Domain Plan.

Richmond Moves Forward With Eminent Domain Plan

Richmond, Calif.’s controversial plan to use eminent domain to seize underwater mortgages in an effort to help homeowners avoid foreclosure took a giant leap forward on Wednesday when the city council voted 4-3 in favor of moving forward with the proposal.

The city will now work with Mortgage Resolution Partners (MRP) to create a detailed plan that will be developed in conjunction with public officials, according to a Reuters report.

The concept involves a local government purchasing underwater mortgages secured by properties within its borders, restructuring them to reflect actual property values and then reselling them on the secondary market. In the event servicers and investors are unwilling to participate, then the municipality would seize the loans (with compensation to the owners) using eminent domain.

In Richmond, officials plan to invoke eminent domain should investors or trusts decline to purchase refinanced mortgages for more than 620 delinquent and performing “underwater” properties.

MRP has brought similar plans before other local governments – most recently in North Las Vegas, Nev., and earlier this year in San Bernardino County in Southern California – however most of those municipalities, including North Las Vegas, have since decided not to move forward with the proposals.

In August, the Federal Housing Finance Agency (FHFA) issued a statement vowing to fight local, county and state eminent domain proceedings in court and threatening to cut off involved municipalities from access to Fannie and Freddie loans should they choose to pursue the eminent domain option.

As the conservator of Freddie Mac and Fannie Mae, as well as the Federal Home Loan Banks, the FHFA is concerned that widespread seizures of the loans and their subsequent refinancing would diminish asset values.

In a recent memorandum, the FHFA says it “continues to have serious concerns on the use of eminent domain to restructure existing financial contracts and has determined such use presents a clear threat to the safe-and-sound operations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.”

In addition to the FHFA, the Department of Housing and Urban Development, and other federal agencies, Richmond could also face a backlash from financial institutions as a result of adopting the proposal. According to the Reuters report, the city had no takers last month when the successor to its redevelopment agency put $34 million of bonds up for sale to refinance previous debt.

Investors holding the mortgages targeted by Richmond are reportedly suing the city through trustees Wells Fargo & Co. and Deutsche Bank AG in U.S. District Court. They hope to block the plan, which they say relies on them to absorb the losses.

Meanwhile, Rep. John Campbell, R-Calif., recently reintroduced the Defending American Taxpayers From Abusive Government Takings Act, which was originally introduced in September 2012. The bill would, in effect, preclude cities and towns from using eminent domain as a tool for keeping homeowners out of foreclosure. Chicago, Stockton, Calif., and Brockton, Mass., are other cities that have proposed such laws.

The proposed bill would amend the Federal National Mortgage Association Act and the Federal Home Loan Mortgage Corporation Act to prohibit Fannie Mae and Freddie Mac from purchasing any mortgage secured by eminent domain within the preceding 120 months. In addition, it would amend the National Housing Act to prohibit the Secretary of the Department of Housing and Urban Development from insuring or guaranteeing any loans in counties where such eminent domain laws are in effect.

To view the online article, please click here.

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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CEO

Alan Jaffa

Alan Jaffa is the Chief Executive Officer for Safeguard Properties, 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® Award finalist in 2013.

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Esq., General Counsel and EVP

Linda Erkkila

Linda Erkkila is the General Counsel and Executive Vice President for Safeguard Properties, with oversight of legal, human resources, training, and compliance. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, risk mitigation, strategic planning, human resources and training initiatives, compliance, insurance, litigation and claims management, and counsel related to 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. She has practiced law for 25 years and her experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, compensation and benefits, litigation management, and mergers and acquisitions.

Linda earned her JD at Cleveland-Marshall College of Law. She holds a degree in economics from Miami University and an MBA. Linda was previously named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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COO

Michael Greenbaum

Michael Greenbaum is the Chief Operating Officer of Safeguard Properties, where he has played a pivotal role since joining the company in July 2010. Initially brought on as Vice President of REO, Mike’s exceptional leadership and strategic vision quickly propelled him to Vice President of Operations in 2013, and ultimately to COO in 2015. Over his 14-year tenure at Safeguard, Mike has been instrumental in driving change and fostering innovation within the Property Preservation sector, consistently delivering excellence and becoming a trusted partner to clients and investors.

A distinguished graduate of the United States Military Academy at West Point, Mike earned a degree in Quantitative Economics. Following his graduation, he served in the U.S. Army’s Ordnance Branch, where he specialized in supply chain management. Before his tenure at Safeguard, Mike honed his expertise by managing global supply chains for 13 years, leveraging his military and civilian experience to lead with precision and efficacy.

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CFO

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard Properties. Joe is responsible for the Control, Quality Assurance, Business Development, Marketing, Accounting, and Information Security departments. At the core of his responsibilities is the drive to ensure that Safeguard’s focus remains rooted in Customer Service = Resolution. Through his executive leadership role, he actively supports SGPNOW.com, an on-demand service geared towards real estate and property management professionals as well as individual home owners in need of inspection and property preservation services. Joe is also an integral force behind Compliance Connections, a branch of Safeguard Properties that allows code enforcement professionals to report violations at properties that can then be addressed by the Safeguard vendor network. Compliance Connections also researches and shares vacant property ordinance information with Safeguard clients.

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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Business Development

Carrie Tackett

Business Development Safeguard Properties