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Eminent domain firm defends against Wall Street charges

on September 25, 2013

Richmond residents’ mailboxes have been stuffed in recent weeks with mailings declaring, “Wall Street is back to take another bite out of Richmond homes.”

The mailer, which was paid for by realtor associations at the state and national levels, refers to the city of Richmond’s proposal to seize 624 underwater mortgages through eminent domain in order to help homeowners refinance. The flyer is filled with references to Wall Street, and it represents just one part of a local campaign to link Mortgage Resolution Partners—the community advisory firm working with the city—with powerful and often discredited financial interests.

“MRP said point blank that they’re investors are from Wall Street,” local real estate agent Carylon Dopp said.

As critics like Dopp point out, the people behind Mortgage Resolution Partners bear some striking similarities to the Wall Street bankers they’re ostensibly fighting. Chairman Steven Gluckstern says that although all three of the firm’s partners have worked for financial institutions in various capacities, none of them have any connection to the mortgage-backed securities that created the financial crisis of the mid-2000s.

John Vlahoplus, the firm’s chief strategy officer, is a lawyer who has spent most of his career working for Swiss banks and insurance companies. Vlahoplus came up with the eminent domain idea in 2008, when thinking about ways to free home loans from mortgage-backed securities.

CEO Graham Williams ran Bank of America’s mortgage business in the 1980s, and GE’s in the mid-’90s. “He didn’t work for anyone in the 2000s, when predatory lending took place,” Gluckstern says.

Meanwhile, Gluckstern, the firm’s most visible figure, enjoyed a 20-year run in financial services before joining with Vlahoplus and Williams to form Mortgage Resolution Partners. He has worked for the notorious investment-banking firm Lehman Brothers, insurance giant Berkshire Hathaway, and several Swiss financial services companies. The Lehman Brothers bankruptcy in 2008 was the largest in U.S. history.

Because of the firm’s connections to numerous financial institutions, some have accused Mortgage Resolution Partners of being disingenuous about their intentions.

“These people don’t want to save the world, they want to make a profit, that’s what these guys do for a living,” says Chuck Finnie, vice president of communications at Brown, Mosher, Whitehurst, Lauter & Partners, the consulting firm that designed the oppositions flyers. “They’re going to make well into the double digits in the return, that’s why they’re willing to invest so much into this.”

Jeff Wright, a local realtor and one of the plan’s most vocal critics, isn’t upset about the firm’s Wall Street connections. “It isn’t necessarily a bad thing,” he says.

However, Wright thinks it’s hypocritical that city leaders, such as Mayor Gayle McLaughlin, have vilified the banking industry while also working with Mortgage Resolutions. “They criticize the industry as a whole, and then extract people from that industry to help supposedly bail out the city of Richmond,” Wright says.

If the plan succeeds and Richmond acquires the 624 mortgages, the firm will collect a flat fee of $4,500 per mortgage. That would add up to more than $2.8 million. If other cities sign up, Mortgage Resolution Partners’ earnings could grow.

“The name of the game isn’t how much volume and money Richmond will generate,” Wright says. “MRP just needs a community that will open the door so that they can get their program started…and the politics in Richmond work well for them.”

Still, the firm and its supporters argue that they aren’t in it for the money. “If MRP were a bunch of Wall Street types, they wouldn’t be charging flat fees – they would be speculating,” says Cornell University professor Robert Hockett, who has provided legal consulting for the firm. “My guess is that these guys, all of which have significant financial market experience for decades, could make a lot more money in some other way.”

There are other stakeholders who also stand to profit from the plan.

If Richmond moves forward with the eminent domain scheme, Mortgage Resolution Partners will search for funders who can lend the city enough money to buy the loans. The firm hasn’t figured out who those funders will be yet, but a hedge fund called Waterfall Asset Management has been named as a potential partner. The Mortgage Resolution firm estimates that if all 624 targeted mortgages are seized, both these investors and the city of Richmond will realize about $6.2 million each.

The city may also avert the financial burdens associated with widespread foreclosures. According to estimates from the Department of Housing and Urban Development and Fannie Mae, private label securities foreclosures could cost Richmond $25 million in the coming years.

Vlahoplus says part of the reason Richmond residents should trust Mortgage Resolution Partners is that the firm has been willing to put its reputation on the line. “There isn’t anybody else who has been willing to step up and get beaten up the way we have,” he says. “If this were some cheap and easy way to rip people off and make lots of money, then why aren’t there a bunch of competitors out there doing the same thing?”

For now, Mortgage Resolution Partners is indeed the only investment firm that has suggested using eminent domain to seize mortgages. But both Hockett and Vlahoplus acknowledge that if the plan succeeds, other competing firms could enter the field.

“It’s not a ‘rip off anybody’ business,” Vlahoplus says. “It’s a really hard, long slog. And I think you can judge us by the fact that we’re still hanging in there, despite all the abuse we’ve been taking.”


  1. […] editorial on the subject in Monday’s Contra Costa Times. SF Gate, The New York Times, Richmond Confidential and many other news organizations have also reported on this story – so there is lots of […]

  2. Jeffrey Wright on September 25, 2013 at 1:10 pm

    “Put their reputation on the line?” What reputation? The company was formed in 2011 and has no track record of real performance. As stated before just about every community that they have proposed their plan to has TURNED THEM DOWN! Most recently the city council of North Las Vegas, NV which is dealing with serious foreclosure issues turned MRP down on a 5-0 vote! MRP has no reputation because they have achieved NOTHING. They need Richmond to build their reputation. Right now MRP has no reputation to protect. Virtually a new firm that has accomplished nothing significant. The other “smart” cities saw the light. Hopefully Richmond’s “blind” officials will be able to say “was blind but now I see!”

    • Juan Reardon on September 25, 2013 at 2:17 pm

      If the City succeeds in keeping owners in their homes, realtors like Mr. Wright will not be earning any real estate commission from these houses…right, Wright?
      I support the program to keep people in their homes even if the realtors loose making out their commission.

      • Tony Suggs on September 25, 2013 at 3:48 pm


        Real estate agents will loose commissions but not on these homes. It will be on future sales of homes that can’t be sold because the banks will not make loans or will make very few loans because they will fear that the City will come in and take over the property.

        Call it Red Lining if you want. The banks will call it risk assessment.

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