Bank of New York Mellon v. City of Richmond, California et al

Filing 20

NOTICE by Bank of New York Mellon re 18 Order on Stipulation for Filing Second Amended Complaint (Attachments: # 1 Exhibit A, # 2 Exhibit B Part 1 of 3, # 3 Exhibit B Part 2 of 3, # 4 Exhibit B Part 3 of 3)(Pollock, Bronwyn) (Filed on 8/26/2013)

EXHIBIT B, Part 3 of 3

Case3:13-cv-03664-JCS DocumentlT-6 FiledOBl22l13 Page19 of 34
TrusÞe Exhlbit B

Prlc€ aç %

of

Prlce

Loanld

1r¡3,437S0

8æ,4

1571E'4,21

10É'3008i¡r8

343474,44

g%

347997,30

2m5æ292

161O7056

6É%

106¡74,49

1ß.i¿l¿!,4640

BBnk

Ealan.e

10r65521106

Tfustee

366.28.1!l

4l%.

171020,00
s69499.98

BâlãnÉe

474æ0,61

n%

ienk

359,An8,89

976/L

3t3¡09.93

wêlb I Erûô Bånk

10dr00961Èl

rdzJ¡Lû:'

73ûl

3973a3.07

9537rEl6

370,0ru0

730,4

2æ;r1J32

ËæB7ttÎL

3/¡353333

wr(

z4çn5,È4

wêlls Faræ.8ank

'à

BEnk

i7Eoos9595

86s5€8æ

-

T29â

4T3sl,S24

ÐrÅ

4t3271^89

¿4d8fi,75

Tt'Á

3s0,s45.Ê8

36-r.6Ír.49

É;nl

2a;2tt137..

\t@tzrs
-

547456¡X1

41!¡6596:!

'Éú

35421610

7,!P/ø

s%

æ4509.26.

2¡*,Æt1i6f

20tl6q.al

n

75'l

56s¡J636

6B9G

381553,70

12/¡8931t53

2i¡8304.I!1

8s9l

212,031s1

61V"

f!¡5.f683:t

€3/o

151,05097

5Ê124A'OS

W€lh FaEo Bank

E!t9l

4t7.gtt27

ß7.93622

¡antr

?9.?2FZpO

141061¿l¡!6.

rañ

rs58!¡5064
1103109591

i,Velts

5t%

z9sF338Z

m6:¡688474

.

d290!rßÉtL

8æ.6

278 08¡t.Êl

473;1i¿4,04

s%

396227l6

6861t49879

373,616.01

249l

89p2L90

15&96525

k

325.069.12

6471995980

well

384736,11

?J%

lrr¡65.68

4t%

1983E.,,26

'

t¡83815.11

16025538

WellsFãr

o

8ãnk

306,1¡8.48

æ%

Í)1F99.42

19929132

47A.274,O5

57:,1

219,u6,98

701401.47

x2%

221,5A4,05

L0tn19L46

25/t,O¡19.99

74%

LA7,L7t32

446;051,48

53%

235,417.0s

LOO7B3519S

764.2îÌ,56

8s%

137;r31.57

1010507837

s2&204.86

B%

lzt,tEB.55

?47.819J6

2!:,4

62,01801

7l!,484,M

42%

rzleo¡,ss

s0%

13t,554:11

37%

ârpõBank

245208È1

1008086698

gank

115F37.18

Aff'í

2fiZBAL
I

309(

538.45832

DS6n44

Wells

384,418,81

17434762

Welb Farro ãank

Æ0,202,s\

ür1,886,48

zso/a

1jß2L4,37

Wells àrs¡ Eank
Wells

aÊ60a627

I

i¡ank

wells

86891397

8A730734

City of Rlchmond, Califomla

141

Case3:l-3-cv-03664-JCS DocumentlT-6 Filed)8l22l13 Page20 of 34
Trustee Exhlb¡t B

Price Ês

96

of

Èlæ

Trurtee

Loanld

BalanrË

welkFargo Éank
Wells Fâruo gsnk

53ilt)40

627,34Læ

49t6

so4,3f.t5

100010s602

37/l-727.64

&%

308,003.64

1000104209

26t 53L:r4

2ß14 |

t¡t€lb F¡rso Bãnk

60l422'¡

351-746.82

510,4

779,241,14

WelbFãrgo Eank

,s4suo16

30&581.22

4to,A

746273.11

Wells FarEo Bãnk

Wells FarEo

well!

Ba

49965757

:

722.4975.2

s!%

?35AÊL94

10¡2¡.!i51¡14

nk

FãrEo Bank

wdhFarso Bank

724î2J9

570-Lt6,8it

5396

30¿892.69

l0DIÐAl88O

4t5J19.8

75fr

:x¡t.?E .81

WellrFarEo Bank

21019

325.717.8¡¡

609¿

196p97.41

Welh F¡rso Eank

21055440

81!P34;76r

459l

ta:2it51:t2

57100!

æ4^A01.27

s096

3126¿S15

58lfi

ÃtLei7-1r

399¿

159,jt3E

4010

587,ztll"94

v

58r009151

1li¿ßn3!t

%

,4325023

welk

FarÊ! Brnk

5810lll:}36

4ß:27.66

67101ñtt

32t.193J4

llreltr FãrEo Bsnk

58to1dl37

7n,7:¿6.72

æ%'

123.O02.4!l

1!

17ö.A',r2-67

649l

110,086,43

\jl¡elb Far¡o Bank

83707,ß2

EIZSíLTS

55o!â

758,576,47

Welle Fã|Eo Eãnk

5l

405J18.40

8*

wolle F¡rso Bark

5810t¡414

376-573.t!:l

s6yo

ußjtÊso

18O169.16

6t%

110.¿xz7,4a

WElls FarÊo Bãnk

WelhFargP Eank

.

64itz8:lril

:

1¡6¿3¡,01

Welh FãrEo genk

F;¿Áú7grs

25/t

7:D.:n

45%

114417,81

Wells FarF sank

Er84{ti}32

271,155'g4

4116

xr1s5L7A

welli F¡rÊ! &ank

1¡'0

s94'599.Gt

a9%

35t436,66

lvells Fàrso Bank

1412:t8642

915,ß1.41

{P,Ã

t27;tssÃ5

Wells F¡rEo Eank

gq0r63s

339.566-01

æyò

2ß5,A29,69

wells FalsD Bank

7úzJ7AÆ6

389,2n.69

wells FerEo Bank

1012:t591.

387.097.99

22t 0365l
15%

SEflÊ,48

Wells Farso Bank

42660f1

3s4?54.6s

631l

?rB-175.89

Welis Fargo Bank

63502:0106

717.647.4A

62%

1¡¡,808,27

t70,237,71

86%

145380.65

Wells FErso Bank

6933221522

438.500.60

64%

2to,6l5,M

9051145831

456,019,91

ez%

375.Oî7.97

Wélls Farqo Bank

22472450

396,959.01

2ß%

uzÞtt.05

Wells Fareo E¿nk

173279L43

¿89.¿45-e1

s*,1

2t2i88.47

wdls

Fargo Bank

r/1020065

129,027.59

7P/,

9986'¿1!'

WellsFarco Bank

601430612

464,7!0,A9

Éf/"

2A4,912.84

WellsFãrso Bark

672376!49

2l3.628,06

s4vo

759498:r6

Wel,stareo Eank

6m1S8s6

260,648.58

sE%

151A29.O7

238,186.08

55%

163,593,83

Wells FãrEo Bank
Wells Farßo Bank

Wells FaGo Bank

City of Richmond, Gallbmla

142

Case3:13-cv-03664-JCS Documentl-7-6 Filedj\l22lL3 Pagezl of 34
Trustes

Eúlbit B

Pn'ce a5 96

.

Loanld

60166ft45

6t3,05:Ì,iv¡
269,355,40

'9%

68230482

2a7gLL?S

*sffi

Bâlence

Þllq'FarEo EEnk

641962022

220:141.58

5t%

,Í. p.iüò Eink

70622înL

372,516,19

rsl:144:02

,'

ü!,325,s?
,ß4,19'1,47

7ü

7097

.. Well
BEnk

Êlh

2691

200029580

welb

vt

Price

49!l

309,220,60

of

2r*

6S!¡0614?2

Þlts FEíâri Eenk

BalancÊ

îI3sÊ7426

TF¡stes

6t

4ID!¡0845

549,
102¡+50,74

7!6.4

.29t.402,17

Te6sd,!t

City of Rlchmond, Califomla

143

Case3:l-3-cv-03664-JCS DocumentlT-6 Filed)\l22lL3 Page22 oÍ34

FI

ñl

E

o
Ë

o

5g

E

i.l,

õ
e

d

F

JJJ-IJls

e
ë

ã

€
ã

.lJo

JJ-lJ*

s

-à
Ë€

I

JJ-

o-2

!-

,f

c
E

.
t
,î

Ë

I

t-.:1

E
-E
E

E

I

ã

IJ (t

,ï

2 Þ
It ä

ln
l3

E E
H

;:

li

T

li

Jç

J-l

I

9

dnlr Je cldç

lË

144

Þ

07787Ë1

ll ¿?åBR1

!73

11335871

11?530ã3

tll€¡t393

1t60841

I0851õ68

r08s1151

10s1s452

i.D

tÊ.sÀJ

aA10

DS€6

sKs4

:5F

,ÂR2.

l8.vúL1

t4

.NCl
t'i4

E

¿

HollsÞ
Nüm¡Er

48

Psgtèzo111

Nqmbet

Pqþ€l

E¡hlbltc

,MA

t¡{tÀ

ûr.

'

]

ffi-

iõlt

Tlns

lErg

IAEø.EACK'

]õ¡.ÊMAN

Itflltl

6ksgtì¡dÍE

lER

ls

lr¡,

L

s:-î

tdNIA

ts

IAIE

lar

lm

sÎ

ErEdBrÍù!

udr

INIA

clty

¡8t¡f

l6E3

:¡g¡1
ü8¡4.

AP

À

C¡J

o

N)
(r)

o

9)
(o

-U

C,)

P

r!

co
N)

o

o

Tt

O)

-_l

=
3
o
=

c)

U
o

o
Ø

(J

À

o)

O)

o
(¡.)

c)

P
(¡)

99

o

tn

o
!)

Case3:13-cv-03664-JCS DocumentlT-6 Filedo4l22l13 Page24 of 34

ñ
cl

o
ã
:c

e

Ë

I

E

I

l,l

l¡,

F
z

g

ll'll.

å

il
Ë

o
s¡

ë€

o-Ë

l-

E

z
s

Ê

I

I
o

o
q

lÉ

ËlËlËlE

i-1, "t"t"
lÈlÉ
È

#

6

ele

L
IR

tlx
146

Case3:13-cv-03664-JCS DocumentlT-6 Filed08l22lL3 Page25 of 34
E

ñ

ü

JE

)
lt
Ë

It

EI

H

E'

d

tt

*ll,
-lJ-

t É=E
5

!E

E ':fl

ñ
-:

.il

-l-t

,lJ*

!x

o
g

nt

e

z
?
E

õ

4

4
E

E

I

sl*l*l-lE slul* dule

nlnle

E

ã

¡jr

É

j

s
tÞ

*1,
glsl 9ls
fll9

5

JJ*
glËlE

E

Ële ululE

d'le

*lele
141

Case3:13-cv-03664-JCS DocumentlT-6 Filedj4lz2lL3 Page26 of 34

,9
0.

ñ

É

5E

Êt

e

ë
:t

H

z
o

3
I
I

95
o

t"t

Ë

I

*1,1.

J.l-

rå
o.2

rr

...

J
F

elçlç

-le

=l!

"l*

Ël€

EltlÈ

148

Case3:13-cv-03664-JCS DocumentlT-6 Filed)Blz2l13 Page27 of 34
I

ñ

s
z

ñ

z
q

E!

ô
o

r9

Ê

-ll*
s
c,

Ê

-

3

,l*

R

E
IJ

Ü€

dÈ
A

o

'i¡

¿
ã

L

*

ß
B

T

::

o

É

rl

¡;
t--

;;

l*

a

sl*
ÉlÊ

Q

Ê

I

lfl

149

Case3:13-cv-03664-JCS DocumentlT-6 Ftled)Bl22l13 Page28 of 34

-9

JT

ñ
:q

g

Ji,

Þ
õ

f9
5

,,l

-lnl*

I

JL

J-l-

B

ãllJJdi

lo
g

så

'l

lt,

åls
s t9
"*

lË

b

åli

ll

E

"l*
Þ

é

"t"
glã

6

slËlr lcl*l* qte

lEl

'lclc

150

168838085

leBE2Bil43

t651735!t6

tÂ1Â?n698

rÉ6r7Æ2a

tBt67391

18087321

164684078

154628888

tBt330ag

ts.t8g?264

151883412

t61124282
ts1¡Â70tKl

r5r118447

149S76803

149821901

1{S483877

.

IECB

.

FagÞ

I ol lá

t'

LAI\¡O

roDz.WFl

s€.20

lE.l

ItrÊ

ttlB

'-7

í

TI

t7

¡E:

¡,

¡T

,*Ì

44

Sl'l

IjTTË

$f1.ì

)ltE .ooK
roo.æt Ërr

!

s,--------loD€¡,Ë¡l. i

q:..-.--

ftñll

€PI¡\ÂÍER

ûolt

I¡{ãATE

o

14ø37247D

À

ûj

o

(o

N)

o

(.o

çr)

-U

ûJ

F

NJ
NJ

co

oO

o

-¡.

O)

-_l

o
=
=

c

c)

o
o

o
Ø

À

O)

o)

o
(¡)

c)

(¡

e
P

(n

OJ

o

1Áø23BAgl

lcsn.Nsruasa¡.c

l¡råÍBFãrEo luo@lgj

Unlt

14S197S86

ì

iãFq¡¡qtra

ÉxhllltC

Case3:13-cv-03664-JCS DocumentlT-6 triledO1l22lt3 Page30 of 34

nlslc

nleln

.g

-l*

¿!

N

s¡9

à
(,

:i

É

lll

à

ll

E

ã

ul

d
Ë

Ë

r¡

gE

o

l-

a€

ó_

eE

Ê

tÉ

t;

li

l$
tË

*t
R ËtE

ËtÊ

_t"t"

I
3

f,Ì

Ë

elr

el q

t9
!: l9l ç E
:41È

ulu

5

E

1s2

64t4241

;ts0B14r2
ìÂqnaiaas

¡76A1.1548

t736l'423
¡7rñ6868

¡7f01836{

i4tE5¿U2?

1092708e5

rd6Ê7172S

vM^L1æ06S

Hol¡Ga

Nurùsr

É"¡oa

!,ti¡ú6¡

E¡ihlblto

DII.

:6cÃtatñ.

&rð€t¡&lllg

E¡¡s6tAd¡r

llnll

U¡r[
Vdt¡6

Clty

t¡803

t03

zF

Pbs ó

.\

(.{)

o

P

o

9)
(o

-U

gJ

NJ

co
N)

O

-¡
o
o

-.1

=
f,

(D

c

C)

o
o

Ø

o

LJ

.Þ

O)
O)

O
(¡)

o

CÐ

P

99

o

Ø

çu

o

Case3:13-cv-03664-JCS DocumentlT-6 Filedj9l22l1"3 Page32 of 34
E
E

0.

ñ

s

!t

E

à

E

ig
t

á

4

Ët

-1,1,,

â[,,

e,

c
È
z

H

ñ
ð

I

õ

il1"

3E
a)

EË
o.É

lË

¡

I

E

a
é
IJ
.14

n

s

4

E

4
Ë

*lsle

*le

EIEIË

glslr

Ë

ñ

"t-t.

elsls

PIP IB

BIFIÑ

qlâlÞ

-l*l*
8lB tåt

eIBI[i

154

Case3:13-cv-03664-JCS Documentl-7-6 FiledO9l22lL3 Page33 of 34
g

ñ

õ

Ií

rll

g

2

It ä
:

:

E¡

t

o

q

H

z

o

tf

-ËE

o

ãq

d.z

z

ä

Í

ùJ

E
tË

t!
IE

lï

lr

Ir
ft

li

Ê.

4

î

1,1

P

.l-

!1,

ë
ö

r.t

li
t

l+

s

frlE

o

slnlt

R

t-

ll

o

J

a

g

Ê

3

:l*
!l

t4

+

glnle

HlÈ

R

I

ñ

È

155

Case3:l-3-cv-03664-JCS Documentl-7-6 Filecll\lZ2l13 Page34of 34

õ
ñ

û

5g
z
Ë

ä
a

Ê

g
d
õ
gE

35
(,

EE
o-z

ñ

Ê

r
q
ã

E

ii

o

*

Ê

I

h
ã

F

3

156

Case3:13-cv-03664-JCS DocumentlT-7 Filedl9l22l13 Pagel of 14

Exhibit G
1s7

rOo

PÄRIIITRS

Mortgage Resolution

P

A Solution to a Critical Problem

À

o
NJ
o

-o
çt)
(o

OJ

r.J

co
N)

O

o_

o

fl

__l

f
F
__l

o

f

c

c)

o
o

U)

è
o

o)

O)

O
(,¡J

hlomeownership Protection ProEram

Ðlnsa}rrrac

ûJ
c)

!!

o

(n

o
Þ

\o

2

DTTTIIERS

Mortgage Resolutíon

A program term sheet and FAQ is intended to be part of this presentation and
contains additional information

or other implications of the transactions discussed herein.

constitute a legally binding commitment or obligation of any of the referenced entities
herein to enter into the transactions described, The terms and conditions outlined
herein are not a comprehensive statement of the applicable terms and conditions that
would be contained in the definitive documentation for the transactions contemplated
herein. This presentation should not be deemed a comprehensive disclosure of risks

This preséntation has been prepared for discussion purposes only and does not

!-ñomeownershl p Pnotection Prog ra m

À

o
(¡-)
o

PJ
(a

!

F
(¡

N)
N)

æ

O

o-

o

r!

-_l

__t

3
o
=
P

c

c)

o
o

o
Ø

CJ

À

O)

o)

o
(Ð

a)

F
(¡)

99

o

ln

o
!.)

.

3

Mortsase

Despite hopes to the contrary, the situation is not materially improving'

Fffi?tH,J?T

The National Association of Realtors, in its December 2011 survey/ found that foreclosure sales
averaged a discount of 22o/o compared with non-distressed home sales (up from 2}o/o a lear
earlier). Short sales, with the cooperation of the lender, averaged 130/o below market value.
RealtyTrac found even larger differences in 2011.

a

After short-lived and shallow periods of home price apprec¡ation ¡n mid 2010 and again in ZOLI,
recent pricìng trends have turned decidedly negative (the S&P Case Shiller 20 City Index is down
7.5olo nationwide from its previous post-crash high in May of 2010)'

Such mortgages are generally concentrated in states that experienced acute housing price
¡ncreases during the bubble -- Arizona, California, Florida and Nevada, to name but a few.

Over 22o/o of the 52.5 million U.S. homes that are mortgaged had "underwater" mortgage loans
at the beglnning of 2Ot2.

In lune of 2006, U.S. residential housing prices hittheir peak. Now, nearly six years later, the
market is once again at a record post-2006 low (down 33.8% from peak as of year-end 2011)

Home prices continue to deteriorate, jeopardizing
mortgage loans and homeowners

The R.eal State of U.S. l'lousing Today
(,

À

P

o
À
o

!')
(o

-U

(¡)

N)

NJ

fl
o
o
O

__¡

-_l

3
o
=
H

c

()

o
o

Ø

o

À

O)

o,

o
(¡

c)

(¡

99

o

ÊL)

o

4

Mortsase

requires no state or federal leoislation, or administrat¡ve action.

fffiîrit;îi

No taxpaver funds wilt be used in connection with the Program and the Program

As the current fair market value of such mortgage loans is considerably less than the face
amount thereof, governments will be able to restructure the mortgage loans acquired though
eminent domain and refinance severely underwater homeowners (with the ability and
creditworthiness to make payments on their restructured loans) into new loans to be sold to
[arge, private sector investors as FHA GinnieMae securities.

Organized by Mortgage Resolution Partners - in public/private ventures with cities and counties
that have been most affected by the morigage and housing crisis - the Program will force
lenders to surrender the¡r mortgage loans to governrnents for full and fair value as determined
by local courts in condemnation proceedings.

The Program employs the ultimate right of local communities and governments - through the
const¡tutionally guaranteed power of eminent domain - to retake control over the weìfare of
their neighborhoods and their fiscal solvency"

Empowering communities to do what Washington
and the private sector have been unable to

Tlre Flomeownership Protection Program
Wi¡l Help End this National Nightmare

À

P

o
(¡
o

(o

9r

-o

(¡)

N)

NJ

o
@

a-

o

Tl

-_l

--l

3
o
=

C

r)

o

a

o
(n

(r

À

O)

OJ

O
(Ð

c)

(¡)

a

o

(t

9J

o

NJ

5

PÀNTilINS

Mortgage Resolution

The program provides a practical and efficient solution to this intractable dilemma'

Municipal, county and state governments, and agencies, have a public interest in halting
defaults and consequent neighborhood deterioration.

Large volumes of defaulted mortgages result in neighborhood blight, abandonment, unkempt
property and transience; These factors exacerbate the already compromised housing
economics in affected areas and accelerate price depreciation'

Throughout the mortgage crisis, underwater loans have demonstrated high default levels regardless of other borrower circumstances. This tendency poses a threat to areas continuing
to see price depreciation.

Defaulted mortgages are typically associated with the cessation of real estate tax payments
and other ratable and usage charges payable to localities. This stresses local budgets and
financing.

Municipalities have enormous incentives to adopt
and execute the Program

Communities are the Principal Drivers of
the Homeownership Protection Program

À

F

o
o)
o

çt)
(.o

-U

(Ð

NJ

o
co

o-

o

Tl

-_l

__t

f

3
o

C

c)

o
o

o
(n

Þ

O)
O)

(¡)

c)

C¡)

e
H

rD

Ø

Êr)

o

o'\

'

.

o

o

6

Mortgage Resolution
PÀIIIIERS

The homeb assessment may be reduced to Í200,000, but the assessment could float
freety back up to $400,000 as markets recover. Of course, once the assessment
reaches $400,000, the rate of increase will be Iimited an an annual basis in many
communÌties

Conversely, consider what would happen if the same homeowner refinanced the
mortgage and (quite reasonably) contested its real estate tax assessment.

sold.

increase may be tied to inflation, which erodes tax revenLles until the home is again

ff that home sells in foreclosure for $200,000, ¡ts tax assessment is reset, and can
only increase by a small amount each year Ìn manY communities. The rate of

Consider, for example, a home that was purchased for $400,000 with a $360,000
mortgage and has a current tax assessment of the purchase price'

For example, when a foreclosed home is sold by a lender in foreclosure, the home's
respective tax assessment is permanently reset in many communities.

Post-crash, cities and towns have suffered greatly, often in seldom understood ways:

The impact on cities must be resolved locally as
broader national policies have proven inadequate

A Grass R.oots Crisis That Demands a Solution

è

P

o
{
o

Ð
(a

-U

Cr)

T$

N)

@

oO

o

-r1

__t

\j

o
=
=

c

c)

U
o

U)

o

(J

À

O)

o')

o
û)

c)

(¡)

o
P

Ø

o
Ð

5

109o.

7

Mortsase

fîì?rH!?!

As of January 2012, based on current default rates for various categories of loans, Amherst
Securìties estimated that between 7.4 million and 9.4 m¡ll¡on add¡tional home mortgage loans are in
danger of defaulting over the next six ye¿rs, assuming no further orice declines or chanqes to
interest rates.

While encouraging lenders and servicers to pursue loan modifications in lieu of foreclosure,
government programs (together with aftermath of the late 2010 "document-gate" foreclosure
scandal) have curtailed the pace of foreclosures and liquìdations, As a result, Q3 2011 säw a
backlog of 394,000 repossessed homes awaiting liquidation, plus an additional 2.86 million homes
securing mortgages that were 12 months or more delinquent, for a total "shadow inventory" of
homes well down the foreclosure pipeline of 3.25 million. This excludes another approximately 1.4
million loans that are between 60 days and 11 months delinquent'

than

Private- and government-sponsored modification programs generally have not worked because
they do not emphasize signíficant principal reduction. Overall. fewer than 50o/o of the 2.26
million mortgages modified from 2008 - 20tI were current atyear-end 2011. The majority of
modifications have merely capitalized missed payments or reduced monthly payments by less

Why does the mortgage crisis still burden the U.S.,
given the plethora of other programs to end it?

A l-lalf-Decade of Partial Mortgage
R.esolution Solutions have Come up Short

o
co
o

lL)
(o

.U

Ìú
F
(.¡)

N)

æ

oO

o

Tt

__l

__t

3
o
=

c

c)

o
o

U)

è
o

o)

O)

C¡)

O

c)

cÐ

o
P
Þ

U)

o
9)

ô,

.

I

Morrsase

fîiîtHtJ??

The g1.1 trillion of remaining "private-label" residential mortgage backed securities
pose extraordinary additional problems by virtue of contractual documentation that
never envisioned a housing price meltdown. Servicers are paralyzed by restrictive
servicing contracts generally forbidding toan sales and limiting loan modifications' With
shrinking margins and continued risks of litigation, servicers act only when forced to'

Ironically, many borrowers continue to pay their second-lien lenders even as they are.in default
on their first mortgage, in order to maintain revolving lines of credit.

gB73 billion of 2nd lien/HELOC (Home Equity Lines of Credit) mortgage loans exist behind a
large portion of the most heavily underwater first mortgage loans. This has made resolution of
underwater first mortgages by methods other than foreclosure and liquidation nearly
ìmpossible; second mortgage lenders (most of which are large banks) are not willing to offer
proportionate relief, despite their subordinate lien status.

At its post-bubble peak, the excess inventory of vacant housing rose to nearly 2.1 million units.
Thal number has declined somewhat - particularly in the case of rental housing. Legacy excess
unutilized vacant housing remains at over one million units.

Systemic problems in the housing and mortgage
industries have diluted other solutions' effectiveness

A Í-lalf-Decade of Partial Mortgage Resolution
Solutions have Come up Short (cont'd)

À

o
(o
o

Ð
(a

!

(¡)

N)
N)

o
o
@

I
o

-_j

__l

o
c)
c
o
=
=
H

U

Ø

o

5

O)
O)

O
(.¡)

c)

OJ

o
P

(n

o
Ð

.

e

Mortsase

fîì?ri!î!

The program will partner with institutional investors that fund the condemnation action
in order to obtain access to attractively priced, GinnieMae-backed mortgage securities
that w¡ll result from the restructur¡ng and refinancing of the mortgages acquired under
the Program, Investors will approve acquired mortgage pools and will earn all
payments received on the acquired mortgages prior the re-securitization thereof'

Loans and liens will be acquired through em¡nent domain atfairvalue, which is expected to be less
than the market value of the home.

Not all borrowers will qualify for Program. Only borrowers who appear likely to repay their loans
will be accepted. The Program will initially acquire loans that are (i) significantly underwater and
(ii) relatively current (not in default)-emphasizing loans held by private-label securitization trusts.

Mortgage Resolution Partners (MRP) acts as manager and forms partnerships with local
governments to facilitate the eminent domain and mortgage restructuring process.
' MRp coordinates with local officials to ¡dent¡fy subject moftgages and refine program structure'
. MRp and th¡rd-parties preliminarily screens for loans qualifying for modification and refinancing,
. MRP earns a fair, flat and transparent per-loan fee for its services'

The Program operates at at the local level to acquire underwater mortgages through eminent
domain, which is a public - not a pr¡vate - right.

Why will the Program succeed where other
solutions have failed?

The Flomeownership Protection Program:
A Practical Solution that Works

è

F

o

O

(D

(.Q

-O
0)

û)

l.)

N)

co

oO

o

I

__l

-{

=

3
o

C

c)

U
o

o
Ø

.Þ

o)

o.)

O
(Ð

ûJ
c)

99

ID

Ø

o
t')

{

California leqal precedent and politicãl oosture favor the Program and constitute an ideal
proving ground.

Counties and cities should have the authority under California and Federal Iaw to acquire by
eminent domain residential mortgage loans secured by real property when the debtor and the
secured propefty are within its jurisdiction.

A consortium of the county and city governments in San Bernardino County, California (the
largest county in the United States, outslde of Alaska) is promulgating a "Joint Powers
Auihority" to undertake the first series of the Program together with MRP.

The program has obtained supporting legal opinions of national counsel specializing in
constitulional law and financial regulãtion. At the Californìa and ìocal level, the Program relies
on fírms with expertise and experience in local eminent domain law and litigation' San
Bernardino County has conducted its own legal review before proceeding wÌth the Program.

.

.

.

.

L0

Mortgage Resolution
PARIIENS

public taking of mortgage loans and liens for the purposes of the Program'

School Professor of FÍnancial and
Hockett, Cornelt University
- In addition, Robert authored a memorandum of Law and white oaoer on the issue of
law
fconomic iaw has

California has one of the highest percentages and the highest dollar amount of at-risk loans.
It is a natural and efficient first state for the program.

"

A $5 billion, initial series to kickoff an up-to$500 billion, 3,000,000-home, multi-state effort,

The Program Begins Where it is Most
l-lrgently Needed - The State of California

À

ts

o
Þ
o

9)
(a

-U

(¡

N)
N)

co

o
oO

T!

-_l

__¡

o
=
=
P

c

c)

o
o

o
Ø

è

O)
O)

ClJ

O

ûJ
c)

ts

o
P

ln

o
l')

roo

Evaluation of

bôrroweß

municipality
informs qualifyihg

Publically ènd
Privately Available
C¡ty Mortæge
Data- The

mun¡c¡pàl¡tyfiles
eû¡¡nent domain

IL

document custodiên'

loan ¡s

PARTXTRS

Mortgage Resolution

The Program's five stages for resolving underwater
mortgages at the local level

The Program's nFive Stages of R.elief"

À

ts

o

f\)

ID
(o
o
F

-o

(,^)

t\)

N)

co

O

o-

o

Tl

--l

-_l

o
=
=

C

c)

o
o

o
U)

o)

O)

O
(¡)

c)

o
P
F
(¡

lL)
U)

o

\o

Transaction Activity

L2

designated Charity
upon Court Order

oi Prè:"

Until Final Value
Determination

1'ì

ri-lì .,i1 1'!r'r

",

.

:':,:' :::: :'..

PARTHERS

È

(r)

F

o

(a

p)

-o

G)

P

r\)

NJ

æ

o
o-

RMBS

.

-r1

o

\Ð*
-_

:

-_l
-_l

=

c
3
o

c)

o
o

Ø

o

À

o-)

O)

o
Û)

c)

F
(!

99

o

tn

o
9)

NMA

Cash

lW

Refinanced b,â'r, I
whole Loan
and Reserve r\¿=G.3_r.,

,:-'r;;¿.;1.:.,..-=,.r :! r,.:i.:''.r.", ri.-'-i..,.r,

Loans and
Reserve Cash

ffi

Cornpensation
Escrow Rece¡pt

Mortgage Resolution

GÐ

l@I

r'

i:t'

Pre-funding Tranche
Commitment

i'a.i

Investor Collateral

A Step-by-Step Analysis of the Program's
0perationa I Methodology

{
O

lnert(ô westwood cao ita
l. co

m

m@westwoo
d ca o

917 699 3s97 (m)
272972 2455 (o)

Ib lu

ita l. co m

Len Blum (Westwood CaPital, LLC)

272 953 6448 (o)

9t7 453 6640 (m)

cl a

13

PANIilERS

Mortgage Resolution

À

Õ

è

o

çt)
(a

-E

cÐ

N)
N)

co

o
oO

Tl

__¡

-_l

F

:J

3
o

c

c)

(J

o
o

s

O)

û)
ó)

Daniel Alpert (westwood Capital' LLC)

ereso lu tio npa rtners. com

Ø

g

o

am (ô m o rtoa

O

c)

(¡)

I
F

o

o
Ð

41s 3s0 5266 (m)
4I5 677 5B9B (o)

d pu tn

Donald H. Putnam (Mortgage Resolution Partners, LLC)

e77 s67 6503 (m)
475 678 5134 (o)

so lu ckste rn @ morto aq ereso lution pa rtners. com

Steven Gluckstern (Mortgage Resolution Partners, LLC)

Program Contacts

Case3:13-cv-03664-JCS Documentl-7-B Filedjgl22l13 Pagel- of l-9

Exhibit I{
171

-l
N)

Saving Homes, SavinE Cities
Solving the Mortgage Crisis Locally

Communíty Action to Restore Equity and Stability

Richmond CARES

(o

o
N)
o

Ð
(a

-U

û)

N)

¡\)

o
o
æ

o

rl

co

__l

=
F

3
o

c

c)

o
o

Ø

o

Þ

o.)

O)

Õ
(¡

c)

ú)

e

o

qJ

o

\ì

2

Mortgage Resolution Partners can help

a

Mort9¿9e Resolution Pãrtners LLC

Pie.33 Sourh Embarcãdero, 5!¡le 2011 Sån F.¿ncisco,

475.795.2032

No one else hss any incentive to prevent foreclosures

o

94111

N)
N)

Richmond has the power to reduce principal

a

CA

o

Reducing principal to below home values will stop foreclosures

o

(o

o
OJ
o

Þ
(a

-E

ÚJ

F

oo
co

I

co

--l

O

These foreclosures will cost Richmond S25 million

C

a)

U
o

a

t,468 first mortgages in Richmond are in Private Label Securities

o

o
Ø

.tr

O)

3
o
=

An average foreclosure costs adjacent neighbors 5t4,53t (HUD)

a

o-)

o
(¡)

c)

û)

e

o

(n

o
Ð

734 of these will be foreclosed (Fannie Mae estimate)

An average foreclosure costs the local governmentSLg,2TT (HUD)

a

Summary

PÅRTI{TR$

Mortgage Resolution

-)
Þ

I mbar.ãde¡o, Suite 2011 San ¡rancrs(o,

$14,531*xx

$10,300xx

charges

ofthe FHA Refinance Programfor BoÍrowers in Negative Equity Pos¡tion
++Household mov¡ng costs, legal fees and administrative
3
+i*Negãtive ¡mpact on the property value of close neighbors

+HUD Econom¡c lmpact Analysis

Neighbors

C¡ 94111 I 4r5.795.2032

Close

Borrowers

- Unpaid Utility Bills
- Property Upkeep
- Policing
- Legal costs, building inspections
- Demand for social services

Taxes

Governrnents #I9,V27

- Lost Property

!-ocal

The Cost of a Foreclosure*

PARTHENS

Mortgage Resolution

H
(0

o
À
o

Þ
(o

-o

(.^)

t\)

r.'J

o
@

o
q

Tt

co

-_l

f,

3
o

c

o
c)

o

Ø

è
o

O)

o)

O
û)

9

co

I
ts

o

ln

lL)

o

\]

-i

L7,434

Renteroccupied

1,,468

¡vortqaqe Resolution Pãrtne.s LLC
P,er 33 sourh Embðrcaderc, Suite 2O1l 5¿ñ FÉncìsco, CA 94111 | 4\5 795.2032

18,659

Owneroccupied

Private Label
Mortsases

Units*

#of

mond Foreclosu res

Housing

R.icLr

734

Mortgages**

Future
Foreclosures Of
Private Label

m¡ll¡on

$Xl

n'r;¡iio¡r

Adjacent
Neighbors

+* Source: Fannie Mae 2011 10k

*source: 2010 census

$t+

Richmond

Cost of Foreclosures

PARTNERS

Mortgage Resolution

4

(o

o
(¡
o

9)
(a

-o

t)

N)

NJ

@

o-

o

Tt

æ

-_l

f

o
=

c

c)

o

U

o
(t

O)

o)

o
UJ

c)

C¡J

o
P

Ø

o
lu

{
o\

Prer 33

Mortgages Held In Private Label Securities

5

-_j

Have not been originated since 2OO7

south Emb¿.c¿dero, Suite 2011 san F.ôncisco,

C-A

94111 | 475,795.2032

"If we are going to stabilize the housing market, we have to address" PLS loans
Federal Housing Finance Agency 2009

Securíties prohihit principal reduction

(o

o
O)
o

çt)
(o

-U

(-^)

ts

co
N)
N)

oO

o

Tt

æ

3
o
=

c)

c

Loans are much more likely

o

(f

Ø

o

À

O)

O)

o
(¡

c)

Cr)

P

o

ÊL)

o

to be underwater.
Riskier loans created in 2004 to 2007 helped create housing boom

4.5 million loans placed in securities not guaranteed by U.S. Government
Loans not eligible for L5 federal programs created since the housing crash

)

l.4ortgage Resolution Pð.tners LLC

.
.
.
.
.
.

Froblern

PÅRTHERS

Mortgage Resolution

'-:
{
-ì

Principal Reduction

S.

Monqdqe Resoluljon P¿nneß ILC
P,er33 Solrh Embèrcèdero, Surte2ollSan Fcncisco, CÀ 94111

| 415-795.2032

6

Example: JP Morgan Chase and Bank of America unilaterally reduce principal on option ARM portfolio loans in
order to reduce defaults and losses

"surely there is a strong case for experimentation with principa! reduction strategies at the local ieve!."
Lowrence Summers, former Treosury Secretory under President Clinton ond former Economic Adviser under
President Obama (Oct. 24, 20LL)

"Government should reduce mortgage principal when it exceeds 110 percent of the home value!' Martin
Feldstein, former Choirman of the Councit of Economic Advisers under President Reogan (Oct. 12, 201L)

"Most econom¡sts see principal reductions as central to preventing foreclosures." Alon Blinder, former Vice
Chairmøn at the Federal Reserve (Oct. 20, 2011)

The Solution

PÀRT}IERS

Mortgage Resolution

o
__l
o
Þ
(o

(o

9J

-tr

G)

NJ

]\J

æ

o
O

o

Tl

oo

-_t

=
=
P

(D

c

a)

o
o

o
U)

À

o)

O)

O
(¡)

üJ
c)

o
P

Ø

o
g)

oÕ

\'¡

$1,798

95o/o

$907

150o/o

$1,798

Mortodoe Resolut;on Þ"4ners LLC

loan
Assumes a 60/o, 30 year, futty amortîz¡ng mortgage is ref¡nanced þy a 4o/o, 30 year, fully amortiz¡ng mortgage' Some
which may add $775 per to the After Program monthly paymen¡
programs may also'requ¡re insumnce,

Monthly Pâyment

8Oo/o

$1o,ooo

($100,000)

$80,000

Home Equity

Loan to Value Ratio (LW)

$190,000

300,000

$320,000

Mortgage Balance

$200,000

$400,000

Home Value

$200,000

This is an illustrative example for the level of benefits that participating families may
realize. Communities benefit from greatly reduced probability of foreclosure.

Why Does Frincipal Reduction HelP?

PARTMERS

Mortgage Resolution

7

P
(o

o
co
o

sl)
(o

-U

H
(¡

N)

Ìu

oo

o_

T1

co

{

f

o
c
3
o

o
o

Ø

o

À

O)

o
ü)

c)

c¡

o
99
Ê

o
Ð

\ì

)

Prer 33 soorh Emba¡càdero, Sui!e 2011

14o.tgãge Resolution Pàrtners LLC

san Frañcisco,

CA

94111

|

415.795.2032

Then local governments can reduce the principal balance on the condemned PLS
mortgages, thereby reducing underwater PLS in their community

Local government, using their constitutional power of eminent domain,
can purchase PLS mortgages when public purpose exists by paying fair value

Securitization agreements and tax laws prohibit the sale of PLS mortgages except
vvhen the mortEages are condemned

Method of PLS Principal Reduction
Com mLi n lties Ta ke Action

PARTHERS

Mortgage Resolution

ts
(o

o
(o
o

9)
(o

!

H
(,l)

N)

NJ

o
co

o-

o

¡

co

-_l

=

3
o

C

c)

U
o

Ø

o

À
(-

O)
O)

C¡)

l)

99

o

U)

o

Ø

Americans for Financial Reform
Center for Popular DemocracY
National Community Reinvestment Coalition
Federal Banking Regulators

AFSCME

Prer 33

LLC

5o!th Embarc¿dero, Suite

l,lo'tgãge Resolutio¡ P¿rtners

2011 5an Fràncisco, C-A 94111

| 415.795.2032

Representing
. 1.6 million state and local government employees
. 600 local housing focused organizations
. 250 national, state and local groups working on financial industry reform

.
.
.
.
.

Broad community-focused support for the program

Who Supports the Program?

PARÏSER5

Mortgage Resolution

9

o
Þ
o
o
Ê
(o

çt)
(c)

!

C¡

NJ

N)

@

o
a
Õ

Tt.

co

-_t

o
=
=

C

c)

I
o

U)

o

À

o)
o)

cÐ

O

o

ûJ

F

o
P

ln

o
q)

oo

l_0

Educate the community

¡,lortqage Resolution Parlners LLC
Pler 33 South Êmbarc¿de.o, Sulte

20rl

Sãn Francisco, cÁ 94111 I 415,795.2032

Arrange resolution of acquired mortgages

Arrange servicing of acquired mortgages

Determine fair market value of mortgages

Demonstrate the public purpose

Advise community in filing eminent domain motion

Arrange acquisition financing

c
3
o

(o

Þ
o

lù
(a
o
F

-u

Cr)

Þ

N)

NJ

ø

I
o
o
o

co

-{

=

c)

U
o

è
o
(n

O)
O)

O
(D

c)

C¡J

o
P

o
lr)
În

Identify and value PLS mortgages

MRP clients are state, county, and city governments that purchase underwater PLS
mortgages and resolve them to the benefit of their communities. In order, MRP provides,
under an advisory contract with the community, the following services:

MRP is a CommLrnity Advisory Firm

PÅRTHERS

Mortgage Resolution

N-)

co

Emþarc¿dero, suite 2o1l San Från.isco, cA 94111 | 415.79s-2032

San Joaquin, CA
Orange Cove, CA

La Puente, CA

El Monte, CA

Comrnunities That Have Engaged MRP

1_'J-

P
(o

o

NJ

o

Þ

-o

t!
F
(¡)

co
N)

o
ÊO

Tt.

æ

-_t

:f

3
o

c

c)

o
o

Ø

o

5

o)

O)

CrJ

o

c)

t)

!9

o

o
!.)

oo

Nothing in the Agreement obligates the City to file an eminent domain motion.

The City does not pay any costs of the program.

Agreement and must approve the next step before it is taken.

The City is in control, at each step in the process the City has the option to terminate the

by the City and agreed to by MRP.

The City retains MRP at no cost per the terms of the MRP Advisory Agreement as modified

Pie.33 South Erbarcaderc, Suite 2011 san Fråncisco, CA 94111 | 4t5,795,2A32

rvrortgè9e Resolution Partoers LLC

3.
4.

2.

1.

Next Steps

12

PåRTI{ERS

Mortgage Resolution

co

o
Þ

(È

o

çr)
(o

-0

H
(¡)

N)

N)

co

o
oO

I

co

o
c
o
=
f
Þ
__I

o
o

U)

c)

À

O)

6)

OJ

O

c)

o
Ë
qJ

Ø

o
Þ

Ø
5

Qualified homeowners who opt into the program may elect to refinance for less than the
current value of their home.

3.

4

6.

13

Homeowners who opt into the program, but do not qualify for a refinance or a lease will be
dropped from the eminent domain motion before their mortgage is purchased.

Qualified homeowners who opt into the program may elect to sell their home in full
satisfaction of their mortgage and lease back their home with an option to purchase it in the
futu re.

Before or after the City files an eminent domain motion the Homeowner may opt out of the
program and their mortgage will be dropped from the motion before it is purchased.

5

The City pre approves all communications with the homeowners and the community.

eminent domain motion.

The City hires M RP at no cost per the terms of the M RP Advisory Agreement as modified by
the City and agreed to by MRP. At each step in the process the C¡ty has the option to
terminate the Agreement and must approve the next step before it is taken. The City does
not pay any costs of the program. Nothing in the Agreement obligates the City to file an

2.

1,.

Key Steps To The MRP Process

PARTI{ERS

Mortgage Resolution

ts
(o

Õ

o
À

(o

-U
tr)

C^)

N)

ÀJ

æ

O

o_

o

Tl

æ

{

P

(D

=
f

C

c)

0
o

o
(t

À

o.)

O)

CÐ

O

c)

(¡)

o
P

ln

o
Þ

oo

Step

X."

yes

to

no

offer?

Accept

purchase loan

Rece¡ves offer

PLS Trustee

to

Material

Prepare Resolut¡on
of Necessity

RON

yes

-r4

F
(o

o

(¡

(D

lù
(a

-o

N)

NJ

o
co

o-

o

ï

co

-_t

U
o
o
c
3
o
=
Ê

opt out.

no

no

Ø

o

(-J

À

O)
O)

o
(.¡)

o

Cr)

F

o
P

Ø

Êr)

o

(¡
Proceed?

Proceed?

yes

Proceed?

Appoints Counsel

Appo¡nts Staff

çily

PÅRTilER5

Mortgage Resolution

Eminent Doma¡n motion.
Drops homeowners that

Builds community
consensus to proceed with

purchase loans

Makes offer

Prepares offer to
purchase Ioans

ldent¡fies Possible
Homeowners

MRP

City Cor¡trols The Process

oo

homeowner
presentation
materials

City approves

City

to homeowners

Presents program

Step 2. Home Owner May Opt Out

no

no

Qualifìes
for refi?

yes

lnterested?

Home

yes

yes

no

opt¡on

To Lease

Option

To
Refinance

PARTWTRS

Mortgage Resolution

ts
(o

o

O)

o

lr)
(a

-o

ts
(¡)

t\)

NJ

O

a-

o

Tl

æ

__l

=

o
=

c

o
o

(f

CN

o

O)
O)

Cr)

O

C¡
c)

99

o

o
Þ

oo
\ì

De

PLS

Mortgage

livers Underwater

Market Value of
Underwater PLS
Mortgage

of

Pays

to

other expenses

Pays 53,260

Prìce

Loan Acquisition

Funds S160,000

çitY

of

Mortgage

Possession

Obtains order For

Trustee Funder

Rece¡ves S160,00o
Agreed Upon Fair

PLS

to

Fu

nder

sends S175,750 to

Reaftor representing
Seller (2.5%)

Sends 54,750

(s%)

sends S9,500 to c¡ty

Rece¡ves S190,000

Underwater PLS
Mortgage For
City/Funder

Holds

Title CompanV

Servicer/

Mortgage

Step 3: Lease/Furchase Solution

Signs a market rate

of
rent to tenant's
purchase account

16

rent

Mortgage

Pays

home to buyer.

sends 519o,ooo
home purchase
price to servicer

lease w¡th an opt¡on
to purchase. Sells
Buys Home When
City Owns PLS

.Credits a portion

,

Realtor as advisor

Selects a Local

Home Owner

Signs Lease,

Home Buyer

PARISERS

Mortgage Resolution

(o

o

ts
__i

o

Þ

T]

(Ð

N)

co
l.J

o_

o

fr.

æ

-_l

f

f
o

c

c)

Ç
o

o
(t

O)
O)

o
(¡)

c)

;-:'

o

Ø

o
Þ

oo
oo

PLS

Mortgage

Delivers Underwater

Market Value of
Underwater PLS
Mortgage

Receives 5160,000
Agreed Upon Fair

PLS Trustee

of

Pays

54500 to

other expenses

Pays S3,260

Funds 5160,000
Loan Acquisition
Prìce

Çily

MortgaBe

Possession

of

Obtains Order For

Funder.

Step 3: Refinance Solution

Records the new

Funder

Sends S180,500

ls%\

to

Sends 59,500 to City

Receives S190,000

to

mortgage payments
from Home Owner

Receives monthly

payoff old mortgage

Sends 5190,000

Mortgage

5190,000 FHA

Underwater PLS
Mortgage For
City/Fu nder

t7

s190,000 FHA
Mortgage @ no cost
= 95% of home
value

Gets a new

FHA Lender Home Owner

Holds

Servicer

Mortgage

PÅRT?{ERS

Mortgage Resolution

F
(o

o

lL)
(o
o
ts
æ

-U

(Ð

N.)

co
N)

O

o-

o

¡.

co

__t

o
=
=

c

c)

tl
o

C'

o

À

O)

O)

Cr)

o

c)

OJ

Þ

99

o

P

o

\o

oo

oT

MRP tee
is

fi¡ed

f¡led,

¡s

MRP

!4

\ttvs selected

/endor aoDroved bv C¡tv

fìled

filed

lome Sold
lome sold
lome Sold
lome Sold
'{ôme Sold

lefore eminent ilomain mot¡on
lefore eminent domain motion
:minent domain motion filed

lome Buyer
lome Buver
:under
:under
:under
:under

Clo5ing Costs

Home Sales Proceeds

:ommun¡tv Housìns Reserve

nvestrnent Bãnkine Fee

Reimbursemenl of MRP Advences

Funder
Funder
Fûnder

Communitv Housing Reserve

50% of MRP Fee

nvestment Banking Fee
Fûnder

FHA Lender

Refinance Proceeds

Reimbursement ôf MRP Aalvânces

Fùnder

Mortg¿ge Servicing

:itY

:under

ìêfinânce Côrnoleted

i,4

RP

vlRP's

ìefinance completed
ìefinance Complêted

¡RP

lefin¿nce Completed

ìefinance Completed

'esolution

inveçfñênt bânk

;ervicer of underwater mortBage

>LSTrust

)ossession of mortgège awarded to city

:under

Faìr Value Peid For Loen

After possession of mortgage by city until

/endor approved by C¡ry

!1RP

RP

Homeowner Education

RP

iVI

LegalExpenses

!4

After eminent domain mot¡on is filed,
lrior to possessjon beinB awarded

Funder

50% of MRP Fee

¡s

bv CiW

\tty's seleded by City

MRP

Homeowner Educetion

RP

MRP's investment bank

Funder

¡wner/realtor

Alter eminent domain motion is filed,
lrior to possession beìng awarded

\4 RP

Leeãl Exoenses

is

CÌtv

lome sold

lome Euyer

RealEstate Commiss¡on

50% of MRP Fee

Realtors selected by home owner

lome sold

=under

Vendors selected by home

PLSlrust

Atty's selected by city

VRP

,ftv's selected bv C¡tv

)ossessìon of mortgage awarded to cìty

beihR awarded

\fter eminent domain motion

:under

)riorto possession

:minent domein motion fìlêd

ìefore eminênt domain rnotìon

:uñder

\4RP

the Money

:air V¿lue Pa¡d For Loan

-eBalExpeoses

)0%

-esêlExDenses

Folåow

25(

Sst

.)\o

21,000

(762,25A

{)

11,500
2,500

l

1300

4,500

1.95C

27.654

(162,3s0)

(162,2s0)

12.25A)

6,690

ls60l
12.550'

4,50C

7À794

15.340

15.900

f9 s00'
12.2SO'

18.150

1S0.00t

(1001

(160,0001

(3ool

(300)

1.65C

l) )so'
(1,6s01

(600)

(3ool
{3ool

llo0)

{2,0001

8,690

(2.2s01
(s601

9,254

(9.5001

183,25C

(2,0001

14,7so\)

(160,000)

(1,7001

{2 2501

{30c

PÅRÏNER5

Mortgage Resolution

(o

o

(o

lD

Ð
(o

-o

û)

TJ

N)

æ

O

o-

o

-rl

co

__t

=

c
3
o

C)

o
o

o
Ø

Þ

O)

o)

Cr)

o

c)

OJ

o
99
P

U)

o
Þ

Case3:1"3-cv-03664-JCS Documentl-7-9 Filecljgl22l13 Pagel of 7

Ðxhibit

I
t90

Case3:13-cv-03664-JCS DocumentLT-9 FiledOgl22lL3 Page2 of 7

#t-11,

ÄDVISORY SERVICES AGRTEMENT

This Advisory Services Agreement ("Agreement") is entered into by and between
Mortgage Resolution Pa¡tners LLC, a Delawa¡e limited liability company (.'MRP') and the City
of Richmond, a municipal corporation and charter city (the "City") and is effective as of
2013 (the "Effective Date").

RECITALS

A.

MRP is a community advisory firm advising public agencies on ways to
assist the agency in reducing the impact of the mortgage crisis with its communities including, if
necessary, by acquiring mortgage loans tluough the use of eminent domain, in order to
restructüe or refinance the loans and thereby preserving home ownership, restoring homeowner
equity and stabilizing the communities' housing market and economy by allowing many
homeowners to remain in their homes.

B.

America in general and the Cify in particular are each experiencing an
historic home mortgage crisis and as a result of the home mortgage crisis, many homeowners in
the City have lost significant portions oftheir disposable income, and some have been unable to
make timely mortgage payments on their homes. This has resulted in unprecedented rates of
default and foreclosure, loss ofhomeowner equity, loss of family wealth, and even loss of shelter
for some families. The home mortgage crisis has resulted in other adverse impacts within the
City such asjob losses, reductions in income, consumer demand, and investment, a spiraling
reduction in property vaiues, a reduction in property and payroll tax revenues, vandalism,
abandoned homes aad a general decline in the economy and the qualify of life for residents.
Restructuring or refinancing mortgage loans wìll benefit the City's residents by preserving home
ownership; restoring homeowner equity; and likely also inøeasing income, property values,
consumer demand, investrnent, and properly and payroil tax revenue.

C.

The City is interested in retaining MRP to act as its advisor to assist the
City in exploring potential solutions to the modgage c¡isis; to assist the City by negotiating on
the City's behalf with entities which will provide the necessary funding to the City in order to
allow the City to acquire loans; and to assist the City in negotiating contracts with third parties
including or','ners ofloans, atlomeys, lenders, data companies, other governinent agencies and
others as necessary to implement a program or ptograms to benefit the City's residents,

NOW THEREFORE, in conside¡ation of the foregoing, MRP and the City agree
as

follows:

1.

PURPOSE. The purpose of this Agreement is to enable the City and MRP to work
together to assess and implement a program or programs designed to ease the impacts ofthe
lnortgage crisis on the residents of the City.

_1_

232-

191

Case3:13-cv-03664-JCS Documentl-7-9 FiledO9l22l13 Page3 of 7

#t-11.

2.

SERVICES. MRP agrees to provide the following ser.rices ("Services"), and the City
authorizes MRP to represent the City as described:

(u)

to advise the City on various altematives in order to provide assistance to its
residents who are burdened with mortgage loans including assessing the possibility and benefits
of the formation of a joint powers authority;

(b)

to identif, and negotiate with companies acceptable to the City, in City's sole and
absolute discretion, to lend funds to tÏe City on a fully secuted, non-recourse basis ifsuch funds
are required in order to provide the necessary relief;

(c)

to provide extensive legal research acquired by MRP on all aspects ofthe
acquisition ald refinancing of mortgage loans including each ofthe legal steps necessary to
implement the necessary progÌams;

(d) to identi$ and negotiate with law fims acceptable to the City, in City's sole and
absolute discretion, to work with the City to implement the prograrns which the City elects to
implement;
(e) ..

to negotiate with other local, state and federal govemments and agencies
necessary to ìmplement programs chosen by the City;

as

(Ð

to negotiate on behalfofthe City with the holders of mortgage loals secured by
property owned by residents ofthe City (and with trustees, servicers, investors and other parties
having a relationship with the holders of the loans);

(g)

to work with the City to identiry mortgage loans to target based upon the City's

criteria;

(h)

to negotiate on behalfofthe Cify with any other third pafiy as necessary to
implement programs which the City elects to implement; and

(Ð

to work -,¡/ith the City to establish education and communication ptograms to
address residents' questions about a program ot programs the City implements.
Provided, however, MRP shall not take action or implement programs or tasks set forth in
subsection (b), (d), (e), (Ð a:rd (h) hereofwithout the express written consent of City in advance,
which consent may be withheld in the City's sole and absolute discretion. Provided further,
however, in no event shall MRP have the authority to enter into any contracts on behalfofthe
City.

3.

COMPENSATION. As its sole and exclusive compensation for the performance of the
Sewices (the "Advisory Fee"), MRP shall receive the sum of$4,500 per loan for each loan
ultimately acquired by the City or otherwise rcsolved in a manner which results in the
restructuring or refinancing of a loan tluough a program implemented by the Cify. The Advisory
Fee shall be paid only through the programs implemented by the City and shall not be paid
directly by the City. City shall not be responsible for any cost or expense arising out ofor related
to this Agreement or any program ol programs the Cìty implements.

2l J-

192

Case3:13-cv-03664-JCS DocumentlT-9 FiledOgl22l13 Page4 of 7

#t-11,
4.

ASSIGNMENT. MRP shall not have the right to assign and/or delegate its duties
hereunder without the prior written consent of City, which consent may be withheld in the City's
sole and absolute discretion.

5.

COOPERATION. Each party agrees to cooperate to calry out the purpose of this
Agreement and to perform all acts arid execute all documents reasonably required to institute the
programs chosen by the City pursuant to the terms of this Agreement or as ate or may become
necessary or convenient to effectuate and carry out this Agreement.

6.

RELATIONSHIP OF PARTIES. The relationship of MRP to the City shall at all times
be that of an independent contractor. MRP expressly acknowledges and agrees that it does not
have the authority to bind the City by contract or otherwise.

7.

TERM. This Agreement shall be in effect for a period of one (1) year from the Effective
Date and will be renewed automatically for successive terms ofone (1) year each unless either
party gives notice to the other at least sixty (60) days prior to the termination of any term. Upon
any such termination, this Agreement shall be null and void and ofno further force or effect,
except as to those provisions which expressly survive the termination of the Agreement.

8.

INDEMNITY.

(a)

Except to the extent caused by the sole active negligence or willful misconduct of
and City's representatives shall not be liable for any liability, penalties, costs, losses,
City, City
damages, expenses, causes of action, claìms orjudgments, including attomey's fees and other
defense costs (collectively, "Claims"), resulting from injury to or death sustained by any person,
or damage to properly of any kind, or any other injury or damage whatsoever, which Claims
arise out of or are in any way cormected with this Agreement ol any programs or tasks
implemented pursuant to this Agreement.

(b) Except to tÏe extent caused by the sole active negligence or willful misconduct of
MRP shall indemnifr, protect, defend a¡d hold the City and its representatives, harmless of
City,
and from any and all Claims arising out ofor in any way related to or resulting directly or
indirectly from (i) this Agreement, (ii) the programs or tasks implemented pursuant to this
Agreement, (iii) any failure to comply with any applicable law, and (iv) any default or breach by
MRP in the performance of any obligation of MRP under this Agreement.
(")

The provisions

ofthis Section

8 shall survive the expiration or sooner termination

of this Agreement.

9.

INSURANCE. Upon receiving approval from the City to take action or implement
programs or tasks set forth in subsection (b) of Section 2, MRP, at its ovvn cost and expense,
shall provide and maintain insurance coverage as required in Exhibit A, "City of Richmond
Insurance Requirements - Type II: Professional Services". MRP shall submit cunent certifìcates
ofinsurance for the policies required in this Section 9 before taking action or implementing any
programs or tasks set forth in subsections (b), (d), (e), (f) and (h) of Section 2.

3-

-214-

193

Case3:l-3-cv-O3664-JCS DocumentlT-9 Filed08l22l13 Page5 of 7

10.

#l-11.

GENERALPROVISIONS.

(a)

Execution. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original. A signature transmitted via scaming and emailìng or
facsimile shall have the same effect as an original signature.

(b)

Modification of Agreement, This Agreement may be modified only by a writing
signed by MRP and the City.

(c)

Entire Agreement. This Agreement together with any Nondisclosure and/or
Common Interest Agreements entered into between the parties either prior or subsequent to the
Effective Date constitute the entire understanding and agreement between the parties conceming
this subject matter.

(d)

Severabiiþ. Ifa court of competent jurisdiction finds or rules that any provision
of this Agreement is invalid, void, or unenforceable, the provisions ofthe Agreement not so
adjudged shall remain in full fo¡ce and effect, The invalidify in whole or in part of any provision
of this Agreement shall not void or affect the validity ofany other provision ofthis Agreement.

(e)

Goveming Law. This Agreement is govemed by and shall be interpreted
according to the laws of the State of Califomia. This Agreement is made in Contra Costa
County, Califomia, and any action relating to this Agreement shall be instituted and proseouted
in the courts of Contra Costa County, California.

(Ð

Waiver of Breach. No waiver of breach of any term or provision of this
Agreement shall be construed to be, or shall be, a waiver ofany other breach of this Agreement.

(g)

Arms-Length Transaction. This Agreement is a product of arms-length
negotiations and each party has had an opportunity to receive independent legal advice from
attomeys of its oun choosing. Thus, neither party can ciaim that any ambiguities in any term of
this Agreement should be construed against any other party.

(h)

No Third Party Beneficiaties. This Agreement will not confer any rights or
remedies upon any person other than the parties hereto and their permitted successors and
permitted assigns.

1.

NOTICES. All notices under this Agreement shall be in writing a¡rd shall be transmitted
by personal delivery or reputable ovemight courier service such as FedBx to the parties at the
following addresses:
1

-4-235-

194

Case3:13-cv-03664-JCS DocumentlT-9 Filed08l22l13 Page6 of 7

#l-11.

MRP:
Mortgage Resolution Partners, LLC
33 Pier South Embarcadero, Suite 201
San Francisco, CA 94111
Attn: CEO

The City:
450 Civic Center Plaza
Richmond, CA 94804
Attn: City Manager

With copy to:
450 Civic Center Plaza
Richmond, CA 94804
Attn: City Attomey
Such notice shall be deemed given upon personal delivery to the appropriate address or
on the next business day if sent by ovemight courier service.

WHEREFORE, the parties indicate by their signatures below their entry into this
legally-binding Agreement.
The City

(date)

(signatwe)
Name þrinted):

Mailing address:
Telephone no.:

E-mail address:
Date of Signing:

Attest

City Clerk

Approved as to form:

City Attomey

-5-236-

195

Case3:13-cv-03664-JCS DocumentLT-9 Filedl9l2zl13 PageT of 7

#l-1,1.

Mortgage Resolution Paúers LLC
Representative

(signature)

(date)

Name (printed):

Graham Williams

Mailing address

33 Pier South Embarcadero, Suite 201, San Francisco, CA 94111

Telephone no.:

47s-',t95-2032

E-mail address:

[e-mail]

Date of Signing:

-6all

196

Case3:13-cv-03664-JCS Documentl-7-10 Filecljgl22l13 Pagel of 11

Exhíbit J
197

c as

e 3 : r- 3 -

cv-

03

6È?-l ö 5*

t ö8'riïf

dH

tT?':î

d'

ÈI3

tdtt zz

t

ts

p as

ez or

LL

ROLL CALI,
Prescnt: Councilmembers Beckles, Butt,
Myick, and Mayor Mclaughlin. Absent:
Councilmember Bates, Rogers, and Vice Mayor Boozé
arrived after the City Council adjoumed to Closed
Session.

PUBLIC CqMMENT
The deputy city clerk announced that the
purpose of the Evening Open Session was for the City
Council to hear public comments on the foliowing
items to be discussed in Closed Session:

CITY COUNCIL
CONFERENCE WITII LEGAL COUNSEL -

ANTICIPATED LITIGATION (Initiation of
litigation pursuânt to Subdivision (c) of Government
Code Section 54956.9):
One Case

There were no public speakers.
The Evening Open Session aclj oumed to
Closed Session at 5:33 p.m. The Closed Session
adj oumed al 6'.28 p .m.
The Regular Meeting of the Richmoncl City
Council was called to oriler at 6:30 p.m. by Mayor
Mclaughlin who led the Pledge of Allegiance to the
Flag.

ROLI, CALL
Present: Councilmembers Bates, Beckles, Butt,
Myrick, Rogers, and Mayor Mclaughlin. Absent: Vice
Mayor Boozé, was absent during Roll Call,.
READING OF THE CODE OF ETEICS
Deputy City Clerk Ursula Deloa read the Code

of Ethics.

STATEMENT OF' COIì¡FLICT OF INTEIìEST
None.

198

case3: 13-cv-03dô4-ge5cnbbêliffiifPrtüiHrEB@dÐISAHHd& ot
201 3; antl withdrew Itcm J-l lrom the cgenda to De
agendize on thc April 16,2013, City Council Agenda

u

under Closed Session.

OPEN rORI]M FOR PUÞLIÇ COMMENT
Yolanda Jones expressed disappointment that
her business was not includecl on the small business
cerlified contractor's list.
Charlie Walker expressed disappointment that
black contractors aÌe not given the opportunities to
work on projects in Richmond.

Antwon Cloird gave comments that another
councilmember apologized for comments made by a
councilmember. He stated that councilmembers rnust
respect ône another,

Henry Parker invited everyone to the Second
Annual "Reach for the Stars" Full Inclusion Fashion
Show and Showcase working with cliildren on the
Autism spectrum, being held April,2l ,2013, af
Lavonya Dejean Micldle School, 3400 Macdonald
Avenue, from 5:30p.m. to 9:00 p.m. tickets are $10.00.
Joseph Puleo gave comments regarding the
behavior of Human Resources Director and Assistant
City Manager Leslie Knight and the lack of discipline
for her behavior due to double-standards.

Etta Jones expressed disappointment that
Yolanda Jónes Construction Company was omitted
fror¡ the small business certified contractor's list She
encouraged the city council to make sure that it does not
happen again.
Kathleen Wimer stated that those on thc public
payroll must act above not only impropriety but above
tho âppearance of impropriety. Ms. Wirner stated that
the City of Richmond cannot have a reputation as being
corupt for our owlr futute together. Thcrefore,
whatever discipline was imposed on Ms. Kright's
crnployment l.ras to correct and extinguish thìs
appearing of impropriety without granting any

prefèrential tleâtmettt.
Alpha Buie gave comments regardirig the plight
of young African Americans seeking employmcnt
specifically ex-offenclers tetutnìtrg to thc communlty
She statcd that many African American contractors are
cxcludecl frorn lists to bicl fol' finding for their
progran]s.

t99

case3: 13-cv-03064-lögu'Ëffi8,1flÎeffi 1ö"?iÍ8ddÉl2lifd*Þåflè¿ ot
thet residcnts in the area wcre ablc to enloy lhe piìrR

rr

also.

Stacie Plummer gave comments regarcling the
Richmond Charter. She stated that chartc¡ was create<l
by the Richmond voters based on an unwavering
foundation of public trust. Ms. Plummer stated that the
charter starts with where the city manager must live, the
prosecutorial duties of the city attomey, and entiust
powers and duties ofthe City Council, and Personnel
Board. She also stated that trust cannot be off-lìmìts to
the people. Ms. Plummer also stated that a debate
regarding public trust began with City Manager Bill
Lindsay's press release.
Jackie Thompson stated that permits for soccer
were issued for certain sections of Booker T. Ande¡son
Park; however, the entire park was being used for
soccer. Ms. Thompson also stated that bullying can be
physical, mental, and emotional. She encouraged the
City Council to review the Personnel Rules. She also
stated that department heads should establish employee

anti-bullying trainìng.
Wesley Ellis stated that Councilmember Beckles
should not flatter herselfby thinking she could hu¡t his
feelings. He stated that the rift between he and
Councilmembe¡ Beckles began when she told him that
he did not have a clue about anything, and called his
name out among all the citizens seated in the Comcil
Chambers.
Stan Fleury thanked Mayor

Mclaughlin

ancl

Councilmember Beckles for having the courage to start
a discussiorr among the leadership ofthe City of
Richmond regarding current issues taking place within
the City of Richmond. Mr. FIeury stated that it was
with great peril that issues were brought fourth to the
City Council, and he encouraged the City Council to
help employees and continue to listen to what they have
tÕ say.

Niechelle Gordan stated that she was tryi g to
acquire a new business license within the City of
Richmond and left a message with the appropriate
department; however, no one returned her call. Mr.
Lindsay will follow-up with the depatlment.
Lalo Herrera gave comments rcgarding Human
Resources Director and Assistance City Manager Leslie
Knight stating she was the worst offende¡ of tlre City's
policies and procedut es.
^

-1"- q^+^ ^^^---+"¡-+-¡

a^"-^ìl'-^-L--

200

case3 : 13-cv-036H43U9"b1ð8rf,"éA1l?vi$" HlËd8$f#åry SåqoB8'ot r r
that lssues arc resolved ln ll Ïalr 3nd cqultaole manlR'r
that preserues the integrity of cìty govemmcnt
Raymond Dryer thanked the Cìty Council for
pulling the lesolution regarding Human Resources
Dilector and Assistance City Manager Leslie Knight
and taking the issue to Closed Session to hear the repod
in its entirety. Mr. Dryer stated that as children you
leam that taking something that does not belong to you
was theft, and encouraged the City Council to following
through with a proper decision,

Michael Beer stated that there will not be a Silly
Parade this year and thanked the many organizations
and individuals for past suPPoft.
Bea Roberson encouraged citizens to attend the
Ma¡ine Clean Energy (MCE) Meeting, Monday,
Apn|22,2013, from 6:30 p.m. to 8:30 p.m. in the
Multipurpose Room at Levone De Jean Middle School,
3400 Mac Donald Avenue; citizens will leam and be
able to ask questions regarding their options when MCE
¡olls out its program.
Sam Casas encouraged the City Council to
establish an ethics commission and also to demand a
detailed budget to restore public trust

Bishop Andre Jackson invited everyone to a
public meeting with Senator Loni Hancock, Friday,
April 5, 20i3; 1:30 to 3:30 p.m. in the Richmond
Council Chambers, regarding the findings ofthe
Chevron fire.

Marilyn Langlois stated that according the
investigative report summary released there has been a
violation ofpublic trust by Human Resources Director
and Assistance City Manager Leslie Klight; a top
leader that should be a role-model to all employees ancl
should be held accountable. Ms. Langlois stated that
since the information that was shared indicated a
misuòe of public funds, the pubic wants and needs to
know what would be done about it. Ms. Langlois also
stated that she supports the residents and city employees
that are calling for honesty, integnty, and fairness.
Juan Reardon stated that Richlrond residcnts
pay taxes to pay saìaries of city stafl and it wâs
essential that residcnts could tllst the people spending
the money. Mr. Real'don stated that those thât manage
others shoulcl be held to the highest standards of
accountabrlity. Mr. Rearclon also remìncled evcryone

that whcn Mayor Mclaughliu learned that an individual
i- l.-- ^Êfi^^.'/4. -ñr'êz?lihû fi'-,4" che i'¡¡me.'lie tclr¡

201

case3:13-cv-0..H#"urï,'Þ:tr#'Ë#I.I}p;"{å1Égp'"çF,fiJffi

f;

þþurr

fraud and remove those conlmitting it,
Texanita Bluitt thanked the City Council for'
holding the joint meeting with the West Contra Costa
County School Board and promoting renovations to the
Kennedy Swim Center and schools throughout the City
of Richmond. Ms. Bluitt stated that the community
needs to work together to improve the quality of
education for our children.
Rodney Ferguson stated that justice delayed was
justice denied and that it was time for the City Council
do the right thing. He encouraged the City Council to
be an example to al1 people that were trying to get their
lives together and if the City Council could not make
the hard decisions, then it would be difficult for others
to make the hard decisions.
Charles Smith started hìs address to the City
Council by quoting from a speech by President Obama
that stated "everyone plays by the same set of rules."
Ms. Smith stated that everyone playing by the same
rules was one of the most cherished values. Mr. Smith
stated that he would suggest that if Mr. Lindsay does
not believe that Human Resources Director and
Assistant City Manager Leslie Knight has committed
crimes that merit the termination of her contract, then
he was ethnically challenged.

Mike Pa¡ker thankecl Stacie Plummer for the
courage to demand that the City live up to the standards
of ìntegrity that citizens want. He also stated that a city
only works when the citizens have trust in city
government and that public trust in the City of
Richmond leadership must be restored. Mr. Parket also
stated that the City of Richmond must hnd a way to
make it clear that there would be zero tolerance for any
managers of the City of Richmond who believes that
they are above the rules.

REpoRT FRorU ìrHIì CIIY
FINAL DECISIONS MADE AND NON^f,_IQl!\xÏ_l}r
CONFIDENTIAL DISCUSSIONS HELP DURING
ÇIASED éESSIAN
City Attorney Bruce Reed Goodmiller stâted
that there were no reportable actions.

CITY COUNCIL CONSENT TAIENDAB
On motron of Cour.rcìlmember Rogers, seconded
by Co¡rncilmember Beckles all items marked with an
/*\ .'.-ro

ô-ñ.^.'^¡

hr¡ rhp ,¡-oni'¡¡,.c

¡¡n+e nf rLo

202

case3: r.3-cv-03684-Tëbr òb8ülfidilftf î0"Hâ8öHlÐffål'Påb%z or
lrscal Year 2l) lll lJ opcratrng Dudgel, lncrecslng library fund revenue and expenditures in the amount of
$6,000, allowing these LSTA funds to be uscd to
purchase literacy materials for the Literacy for Every
Adult Program (I-EAP).

rr

+-Approved a contract with CPS HR Consulting
to develop and administer promotional exatninations for
Fire Captain, Fire Engineer, and Fire Inspector I in an
amount not to exceed $55,000 and for a term of April 3,
2013, to June 30, 2015.

*-Adopted Resolution No. 25-13 amending the
City of Richmond's Position Classification Plan to add
the new ciassification of Duplicating/Mail Specialist I/II
and delete the classifications of Duplicating/Mail
Assistant and Senior Duplicating/Mail Assistant.
The matter to introduce an ordinance for fìrst
reading establishing the wages, salary, and
compensation fo¡ the new classification of
Duplicating/Mail Specialist I (Salary Range No. 12:
$3,403 - $4,131lmontþ and, the new classification of
Duplicating/ Mail Specialist II (Salary Range No. 18:
$3,743 - $4,55l/month) was presented by City Manager
Bill Lindsay. Diane Canepa gave comtnents. The
matter was continued to Àpril 16,2013, to gather

more information,
The matter to approve an amendment to the
contract with Strongbuilt Const¡uction Company for
building repair work pelfotmed at 1350 Kelsey Street in
the amount of $5,912.77, increasing the total cost of the
project to $12,192.11, and extending the term through
March 31, 2013, was presented by Project Manager
Craig Murray. On motion of Vice Mayor Booze,
seconded by Councilmembe¡ MyT ick approved an
amendment to the contract witl.t Strongbuilt
Construction Company by the following vote: Ayes:
Councilmembers Bates, Butt, Myrick, Rogers, Vice
Mayor Booze, and Mayor Mclaughlin. Noes: None.
Abstentions: None. Absent: Cotlncilmembcr
Beckles.

*-Approved an alnenclment to the lcase of
plopefiy located at 500 23rd Street (llichmondBuILD
llI), extending the term for the six-months encling Jttne
30,2013, at a cost of$5,000 per month, fòr a totai lease
paymer'ìt of $30,000.

*-Approvcd an amcndtneltt to the contract with
The Glen Price Croup to develop the Richmoncl
Workforce Investl¡ent ì3oard Strategic Plan for 2013a^1'7 .,-.1 ,,--l^,,-

--^-+ --,-l:^-t'1^-^

L', +l-^ ^----.1

..-^^

203

case3: 13-cv-03664-JCd hUðêUñ5élffPl?ð' FflêtrdgÐáfÌB"S#8b ot
Regina Almaguer. LLC J'or scrvices ¿s prùJect manãger
of the Poft of Richnond Public Art Project in an
amount not to exceed $33,750 was prcsented by Afis
Ðirector Michele Seville. Angel Perez, Bruce Beyaelt,
Tom Leatherman, and Fletcher Oakes gave cornments
A motion was made by Councilmetnber Bates,
seconded by Councilmember Beckles to approve a oneyear contract wìth Regina Almaguer, LLC for services
as project manager of the Port of Richmond Publìc At1
Project. A substitute motion was made by
Councilmember Butt to direct the Port Department to
contribute the entire cost of $600,000 and contribute
$225,000 to the Arts Advisory Committee and another
$225,000 to finish the Bay Trail Project failed for lack
ofa second. The original motion passed by the
following vote: Ayes: Councilmembers Bates, Beckles,
Rogers, Vice Mayor Booze, and Mayor Mclaughlin'
Noes: Councilmember Butt' Abstentions:
Councilmember Myrìck' Absent: None.

rr

The matter to apptove the followìng
reappointments to: Commission on Aging: M¡'rtle
Braxton, incumbent, term expiring May 19, 2015;
Delores Joh¡son, incumbent, term expiring May 19,
2015; Beverly Wallace, incumbent, tem expiring May
19,2014;ÊLi Williams, incunrbent, term expiring May
19,2014; Human Relations and Human Rights
Commission: Betty Bumts-Wrìght, incumbent, term
expiring March 30,2016; Point Molate Citizen
Advisory Committee: Charies Smitll, incumbent, tetm
expiring May 3,2015; Recreation and Parks
Commission: Pam Saucer-Bilbo, incumbent, term
expiring October 26, 201 5; Economic Development
Commission: Qiana fuley, ìncumbent, term expiring
March 30, 201 6, was pullcd for public comments by
Jackie Thompson. Following pnblic comment on
motion of Vice Mayor Booze, secondecl by
Councilmember Bates approved the reappointments by
the unanimous vote of the City Council.

*-Adopted Ordinance No.4-13 cstablishing the
wages, salary, and compensation for the new
classification of Source Control Supcrintenclent (Salary
Range No. 064D. S1 ,211 - $8,829/month).
The matter to approve an Advisory Services
Agreement with Mortgage Resolution Partners, LLC to
assist the City of Richmoncl in reducing the irnpact of
the mortgage crisis, by advising orr the acquisition ol
mortgagc loans through the use of eminellt domain, in
orcler to restructure or refittancc the loans and thereby
preserving home owne r sìiip, restoring hollleowner
equity and stabilizing the comn.runities'housing market

204

gâve

of l-1

Councilmember Beckles, seconded by Councilmernber
Myrick to approve an Advisory Se¡vices Agreemeût
with Mortgage Resolution Partners, LLC.
Councilmernber Myrick recluested a report back from
staffregarding loan criteria and specifics. A substitute
motion was made by Vice Mayor Booze, seconded by
Councilmember Bates to hold the ilem over for 30 days
to gather more iufotmation. Following cliscussion,
Councilmember Bates withdrew his second. The
original motion to approve an Advisory Services
Agreement with Mortgage Resolution Partners, LLC
passed by the following vote: Ayes: Councilmembers
Bates, Beckles, Myrick, Rogers, Vice Mayor Booze,

Mclaughlin. Noes: None. Abstcntions:
None. Absent: Councilmember Butt.
and Mayor

RESOI-UTIONS
Withdrew from the agenda tlìe matter to adopt
a resolution calling for restoration ofpublic trust
tluough the removal of an executive City ernployee
from current position.
The matter to adopt a resolution in support of
AB 218 (Dickinson) to expand the "Ban the Box"
policy to state emplo;,rnent to eliminate the inquiry
about criminal history on any initial employnent
application was presented by Councilmember Beckles
and Mayor Mclaughlin. Jackie Thompson, Marilyn
Langlois, and Eduardo Martinez gave comments. Ou
rnotion of Councihnember Beckles, seconded by
Councilmember M;rick adopted Resolution No. 26-13
by the unanimous vote of the City Council.

COUNCIL AS A WIIOL.E
The matter to review the proposed Term Sheet
for post-collection setvices as negotiated between
RecycleMore and Republic Serviccs and authorize an
agreerncnt based on this Temr Sheet and review the
proposed solid \¡/aste collectìon servìces based oti the
Term Sheet, and other possible modifications to
collcction services, and authot'ize staff to develop a
proposed agreemcnt with Rcpubüc Services rcgarding
these service modifications for subsequent Council
approval was presented by Sustainability Associate
Jennifer Ly anci Rob I'Iilton, fiom HF&H Consultants.
A motion was made by Vicc Mayor Booze, seconded by
Councihnember My ick to revicw the proposcd Term
Sheet for post-collection services as negotiated betwecn
RecycleMore and Republic Services attd authol'ize an
agreenlent based on this Term Sheet and review thc
.^*^.^^..^.r -^li¡,,,-"r^
^^lì--+;^¡ .-."i^-" L.¡/'rì ^- rL^

20s

case3:r.3-cv-03Góqr$gg'uEd8t,Rfêhffi?ile.' Flfe8Ué122Æ IFåile"f8 ot
as detajls are worked out. I he lrlcndly amendmen't was
accepted. Councilmember Bates requested that staff
pl'epare ân analysis ofthe benefits ofkceping the JPA.

n

The motion including the friendly amenclment \tas
approved by the unanimous vote o the City Council.

The matter to discuss and give direction to staff
regarding the Code Enforcement Department's use of
contractors outside the City of Richmond for Code
Enforcement demolitions was presented by Vice Mayor
Boozé and Code Enforcement Manager Tim Higarres.
This item was referred to the Public Safety Committee,
and Vice Mayor Boozé also requested that a staff form
a committee in addition to the Public Safety Committee
specifically to discuss the issue.
The matter to consider directing the city
manager to prepare a plan to publicize and to assist
residents to take advantage of programs for fiee or
reduced cost access to the Internet, including seeking
out grants was presented by Councilmember Rogers and
Mayor Mcl-aughlin. Councilmember Bates suggested
that staff outreach to the Richmond Neighborhood
Councils to inform citizens. Jackie Thornpson aud Ken
Maxey gave comments. On motion of Councilmember
Rogers, seconded by Mayor Mclaughlin directed the
city manager to prepare a plan to publicize and to assist
residents to take advantage ofprograms for flee or
reduced cost access to the lntemet, including seeking
out grants by the unanimous vote of the City Council.
The matter to rcceive a report flom staff on the
ofproposed solar powered streetlights along
status
Richmond Parkway was presented Councilmember
Beckles. City Manager Bill Lindsay gave an oral
reporl. Councilmember Beckles directed staff to submit
a feasibility study ofsolar powered streetlights. Vice
Mayor Booze stated that the installation of lighting on
the Richmond Parkway was currently uncletway. Sims
Thompson gave comments.

REPORTS OF OFFICERS: STANDING
COMMITTEE REPORTS. RTJIiERRALS TO
STAFF. AND GENERAL REPORTS (INCLUDÍNG
AB 1234 REPORTS)
Counciltnember Bate annor¡nced that Richmond
citizen M1.111e Huut passecl and requested that Mayot'
Mclaughlin adjourn thc meeting in honor of her
memory.

206

case3: t 3-cv-o3G64lSUSd óbbürfi'eHffzltd"FlPdüûåiå2il3"FaoeL1 of
resident M¡le Hunt, to rneet agairr on Tuesday, "
April 16, 2013, aI6:30 p,m.

1t

City Clerk
(SEAL)
Approved:

Mayor

207

Case3:13-cv-03664-JCS DocumentLT-Lt Filed)9l22l13 Pagel of 3

Exhibit K
208

Case3:13-cv-03664-JCS Documentl-7-1L Filedlll2Zl13 Page2 of 3

latimes.com,/business/money/la-fr-mo-richmond-eninent-domain-20130730,0,7196420.story

latimes.com
Richmond adopts eminent domain mortgage plan
By Alejandro Lazo
10:46

,

AM PDT, July 30,2013

Richmond is adopting a plan to take over underwater mortgages that would invoke
city's eminent domain powers if necessary.

the

adverllsement

The city will be the hrst in the nation to formally adopt the novel but controversial plan that was
rejected by San Bemardino County and two of its cities earlier this year.
The city said it will buy home mortgages from financial institutions, write down those loans and
refinance homeowners in the properties into new loans. Iffinancial institutions do not cooperate, the
city will seize the loans using eminent domain, Richmond Mayor Gayle Mclaughlin said.

PHOTOS: SoCal's mollla;lfnrdable ZIP ÇQ!þs for home buvers
"This is a tool to get thè job done," Mclaughlin said. "The housing crisis is still ongoing."
The city. on Tuesday sent notice to the holders of more than 620 underwater mortgages for homes in
the city, asking these servicers and trustees to sell the city these loans, The city sent letters to 32
entitiei. The city plans further such actions in the future, officials said in a conference call with
repofiers Tuesday.
to serve the public good, as when local
not loans
Eminent domain is usually used to seize land
'fhe Richmond plan- would be the first widespread attempt at
goverrunents seize blighted properties.
using eminent domain to seize residential mortgages
The city will team up with the San Francisco firm Mortgage Resolution Partners, which last year
pitched the plan to San Bernardino and two of its cities, Fontana and Otttario. That county and the two
cities formed a Joint Powers Autholity to consider the eminent domain idea but then shelved it after
Wall Str.eet groups voiced sìzable opposition and little public support was heard. The county and the
two cities were the first colnmunities lo considet thc plan.
The Securities Industry and Financial Markets Association of New York has been a hefty oppotlent of
the eminent clomain plan, with its rnanaging difector appearìng before a number of municipal
meetings to speak against it. On Tuesday, the group reaflirmed its disapproval in a brief email to The
Tilnes.

Mclaughlin, the Richmond mayor, said on'I'uesday that city officials had spoken to membels of the
group but remained resolute to move fotward despite their opposition.

209

Case3:13-cv-03664-JCS DocumentlT-11" Filedjgl22l13 Page3 of

3

,'We are just not going to back down; we really feel it is the responsibility of the servicers and the
banks to fix this, ãnd they haven't, so we are taking this into our own hands," she said "lt is our
community that is at stake he¡e."

Mortgage Resolution Partners will provide the funding for Richmond to purchase the loans and also
finance any litigation.

ALSO:
Southland houre nrices soar' 28.30% iu .lnue
Pendìnq home sales fàll in June. Realtot' r¡roup savs
Sari Eeiiràr'diijó abandons eminent diiúiaììi xiôrt!*tgc-Þhd,

Convrisht O 2013. Los Anreles Times

210

Case3:13-cv-03664-JCS DocumentlT-l-2 Filedjgl22l1'3 Pagel-of l-3

Exhibit L
2ll

Case3:l-3-cv-O3664-JCS DocumentlT-l-2 Filecl)Bl22l13 Page2 of 13

MortüaÇe R*snlution

P&MTffiHffi$

FnEoupruruv AsKED Quesrlorus

TABLE OF CONTENTS

SECTION TWO:

FAIRNESS

'

"."' "'.' ".""..5

SECTION SIX: ORGANIZATION/FOUNDERS.r,.ii¡r;¡¡.,¡,i¡,¡.¡"'¡,;¡i,'¡!¡';'..'.'¡¡..,.ì.'...".....'..,'.' 12

t'lùrlgâ9e R¿soluljon Parlners LLC

175c l'lcnt.lomery SlrÊet. Sle 127 lS¿nFr¿ncisr:o,CÅ9411j l4rS

!54.8527

ZD

Case3:L3-cv-03664-JCS DocumentlT-12

Filedogl22lI3 Page3 of

1,3

Frequently Asked Ouestions

SECTION ONE: LEGAL

apPly to real estate? No. The power of eminent domain
applies to every kind of property, including real estate (like land), tanglble personal property (ìike
goods), and intang¡ble personal property (like loans).

1. Þoesn't em¡nent domain only

Can the government condemn property by eminent doma¡n and transfer ¡t to a private
person to use to earn a prof¡t? Yes. in California and many other states, as long as the
government finds that the prìvate use may serve a public ¡nterest. Governments do so ¿ll the time.
selling condemned property to developers who profit from bu¡lding offices, shopping malls, or
hous¡ng. ln fact, in l¡mited cases a government can even authorize private part¡es to d¡recÈly
exercise eminent domain to acqu¡re property for their business use without any government

2,

involvement at all.

and legally obl¡gated to pay the entire bâlance of their purchase
money mortgage? No, parÈicularly in california. Reckless lending standards in the past have
caused real estate bubbles and crashes resulting in defaults that have harmed homeowners,
destroyed the local economy and overwhelmed the state judicial system. As a consequence,
California has deliberately allocated purchase money mortgage loan risk to the lender by enacting
laws thät allow a borrower to walk away from a purchase money home loan and effect¡veìy limit the
lender's remedy to foreclosing on the home. This ls a fundarirental publ¡c pol¡cy ¡n California and a
fundamental part of the homeowner's bargain in tak¡ng out a purchase money home ìoän Lenders
are fully aware of the¡r share of the risk of mak¡ng a purchase money home loðn in Caì¡forn¡a.

3. Are borrowers morally

Can the government acquire performing loans, or only defaulted loans? As long âs it is
âcting to further a public purpose, a goveTnment can acquire any kind of loan ¡ncluding Performing,
delinquent or defaulted loans. A government can purchase underwater perform¡ng loans to further ã
number of purposes -- negative equity is ihe single greatest predictor of future default, ãnd it creates
harm even absent default (includ¡ng reduced homeowner investment in property maintenance and
dìslocation in the local property sales market because of restr¡ct¡ons on short sðles)'

4.

trust the legal advice you have received? Mortgage Resolution

Partners
(MRp) has received the adv¡ce of counsel with nat¡onal or stãtewide reputations for excellence and
expert¡se in lltigation, eminent doma¡n law and constìtut¡onal law. Both clients and other lawyers
regularly select the same counsel to handle cases ra¡sÌng eminent domain, constitutionaì and publlc

5. What makes you

policy lssues, and we have great confidence in their adv¡ce. U¡timately, each city will rely on its own
legal review before proceeding wìth eminent domain actions.

6. What rights will the homeowners have when you Provide notice?

Homeowners will have
that they have now under theif loan agreements. This
the säme rights and the same obl¡gat¡ons
program sìmply changes the owner of their loan, not the terrns of the loan. But more ìmportantly,
they will gain an opportunity -- the opportunity to,work with a new loan holder that is not bound by
the ìimjtations of any securitization contract and lacks the conflicts of interest that current loan
serv¡cers have. Also, current plans provide for the homeowners to opt in to the ¡4RP program on a

[4origag,: Resôlution Paruìers LLC

1750 Nlo¡tgornery Slfeel, Ste 127 I

S¡¡

Fr¿ncisco, CA 9411-r I 415 954 8521

2t3

Case3:l-3-cv-03664-JCS DocumentlT-12

Filedjglz2lL3 Page4 of l-3

Freeuentlv Asked Questions

voluntary basis,

7. What r¡ghts will the

loan owners have? The trusts that currently hold the mortgage loans will
have the r¡ght to receive the fair market value of the loans. Th¡s includes the right to a tr¡al to
determine the fair value of the loans if the trusts disagree w¡th our valuation.

8, What about

second mortgage holders? We expect to negotiate directly w¡th holders of
sècond loans, or use eminent doma¡n to acqu¡re those loans, ¡n order to comprehensively deal with
the homeowner's total mortgage debt. If a second loan has s¡gnificant value because it is fuìl
recourse it may be necessary to acquire only the mortgage lien or a lesser ¡nterest in the loan.
Unlike ex¡sting lenders, we will be able to deal w¡th ðll loans encumbering a property
comprehens¡vely at the fâir value of each.

need eminent domain? Why don't you just buy loans in the market? Private
securit¡zat¡on trusts hold approximately $1.4 trillion of loans; we could offer to buy their underwater
loans, but thelr trust agreements forbid them to voluntarily seìl the loans. Eminent doma¡n allows us
to purchase those loans as well as related second mortgage loans if the holders of the seconds are
also unable (or unw¡lling) to sell, Eminent domaìn is a way to successfully consol¡date ownersh¡p of a
homeowner's mortgage loans in the hands of someone with the economic incentive and freedom to
modjfy or otherwise resolve the loâns.

9. Why do you

10. How do you plan to address the legal backlash that could occur?

California has a well
judicial process for adjud¡cating em¡nent domain actions and gives them priority ìn court.
defined
Loan owners (or Servicers on their behalf) might l¡tigate the right to purchase the loans ând the
amount of compensatìon due. We are confident that the communities have the author¡ty to purchase
the loans, and we will provide resources to defend against any legal challenge to th¿t r¡ght. We will
stand willing to negotiate over pr¡ce w¡th the goal of reaching agreement on fair value. Absent
agreement, there will be a final jury determinat¡on of fa¡r value ln the condemnation act¡on.

11, fsn't there a legal step where iudges must agree to the em¡nent domain plea? What ¡f
th€y don't? As ìong as the community has the authority, as confirmed by the court, to purchase the
loan and pays fair value, the court must Þermit the acqu¡s¡t¡on. There ¡s a process under which the
community may request the court's permission to purchase the loan first and finally determine fa¡r
value later (a "quìck tàke"). We expect that the quick take will be a necessaTy component of the
pìan.

Secüritization trusts typ¡cally hold the first mortgage loans that
will be purchased by eminent domain. A vâriety of investors including hedge funds and mutual funds
own interests in the trusts and thus the ultimate right to päyments for the loans. Third party banks
service the ìoans, and third party trustees monitor the servicers. Banks typicalìy hold for their own
account the second mortgage loans,

12, Who really owns the loans?

Assuming the purchase requìres court act¡on, the communities will go to
court, as will the securit¡zation trust and holder of the second mortgage loan.

13. Who goes to court?

lvlorigage Resoluli¡rrr Parlner s LLC

1750 l'1ontgo.¡ciy Slrecl, StÊ 127 I

5ð¡

Frênclrico, CA

941i1 l4l5 95'i.8527

214

Case3:L3-cv-03664-JCS Documentl-7-l-2

Filed)Bl22ll3 Pages of 13
l4ay 4, 2012

Frequently Asked Ouest¡ons

Page 4 of 12

The tfust or bânk may seek a
higher valuat¡on ¡n the legal proceeding. They and we wÍll provlde evidence of value; inìtially the
judge, and ultimätely the jury, will determ¡ne fair value.

14. What happens ¡f they question your valuation of the loan?

15, How will you deal with missing notes, ¡ncomplete records in MERS, and sim¡lar
m¡stakes that create havoc ¡n the foreclosure Process? Many loan originators and servicers
lost ìmportant documents or fa¡led to record trânsfers in their'hâste to securitize and re-securitize
loans. Borrowers rarely deny that they owe their debts; they just need to be sure that they pay the
r¡ght person, and courts need to be sure that anyone who tries to foreclose actuàlly has the right to
do so, Em¡nent domain resolves these ¡ssues, It transfers complete ownership of the loãn to the
city, regardless of missing paperwork. Anyone who clâims to own the loan can prove it ìn the action
(the c¡ty) and
and. receive the proceeds. Em¡nent domain sett¡es once and for all who owns the loan
who has the right to receive payment. clearing up the paperwork disaster is not a purpose of our

program, but ¡t ¡s a fortunate side benefit'

llorlg¡qe Resolutton Paftners

LLC

1750 l'lonlqomery 5heet, Ste

r27

S¿ìrì

Frðnc-c.o, C^

911Ii

415 954 3527

215

Case3:L3-cv-03664-JCS DocumentlT-12

Filed)Bl2ZlL3 Page6 of 13

F¡equently Asked Questions

SECTION TWO: FAIRNESS

l.IsyourProgramãgiveawaytotheundeservingwhoborrowedmorethantheyshou|d
have to purchase houses they never should have owned? No. Everyone ¡n Cal¡fornia has the
opportunity to purchase a home by borrowing from a lender who is willing to take a loss ìf home
prices decline by more than the homeowner's down payment (see Legâl FAQ 3 above), The lender
risk.
Vv,illingly takes the risk when making the loan, ênd the fair market value of the loan reflects that
give the lender the benefit of its bargain. By doing ân
By purchas¡ng the loan at fair value, we
economically rational modificat¡on or other resolution w¡th the homeowner, we respect the
homeowner's benefit of his or her bargain,
Regardless of the legal niceties, is ¡t just wrong and a moral hazard to let these
homeowners stay ¡n their homes? No. we protect our ne¡ghbors' homes, even allowing them to
keep the equity ¡n thelr homes while canceling their debts ¡n bankruptcy, because ¡t is the r¡ght thing
for them and the right thing for us. we do not put our ne¡ghbors into debtor's prison, or make them
homeless unnecessarìly, America is facing an econom¡c crisìs and the solution requ¡res pract¡cal
action that keeps people in the¡r homes. we are all in ihis together, for our neighborhoods, our
states and our nation. The real moral hazard is that the system is forcing homeowners to default ¡n

2.

order to achieve ratìonal solutions.

Won,t those who don,t qualify think th¡s is unfair? As with many societal issues that have
challenged us in the past, solutions do not always provide a direct benefit to everyone. In th¡s case,
success w¡ll benefit even those who do not qualify by stabiliz¡ng home values, restor¡ng
neighborhoods and promot¡ng the local economy. Together with the state and the part¡c¡pating
communitìes we will actively address public concerns and educate the publ¡c on the benef¡ts to all of

3.

stemmìng the default cr¡sis.

l¡orlgage Resoluliorr Partners LLC

i7!0 i!o¡!qomery Slrccl,

Sle 127 I5¿n'rralcrsco,aA94iII I415.954 8527

216

Case3:1"3-cv-03664-JCS DocumentlT-12 Filed]Bl22l13 PageT of 13
Freqùently Asked Quest¡ons

sEcTIoN THREE: BUSINESS

fair market value of a loan, and how will you detefm¡ne it?

Fair market value
under any compuls¡on to transact.
is the price that a Willing buyer Would pay a w¡lling seller, neither
Similar sales of troubled loans ¡n the secondary market exist and are good evidence of fair value
These sales occur at a sìgnificant discount to the fair value of the home because of the foreclosure
d¡scount -- the market,s recogn¡t¡on of the cost in time, money and effort to forecìose on the
homeowner and thereafter to maintain and sell the property. we w¡ll use these market dãta po¡nts
and supplemental methods includ¡ng discounted cash flow modeling,

1. What

is the

How will MRP make money? MRP w¡ll partner w¡th communities to purchase all ìoans (or
¡nterests ¡n seconds) encumber¡ng a property through eminent domain at fair value, which w¡ll be
significantly less than the fair value of the home. We w¡ll then proactively work with borrowers to
mod¡fy or refinance the loans, or possibly take other action (such äs a deed in lieu of foreclosure and
rent-back or a short sale). current plans prov¡de for MRP to charge a simple, fair, and transparent
flat fee (pa¡d for by ìnvestors) for its services'

2.

3. Why hasn't anyone else tr¡ed this, or have they? Governments

have used eminent domäin
in the past to address housing disìocatìons, For example, Hawaìi used a statew¡de program of
eminent doma¡n to purchase homes from landìords to sell to tenants when concentrâted land
ownership had made it d¡fficult for peopte to buy theìr own homes. some have advocated us¡ng
em¡nent domain to purchase mortgage loans in the current cris¡s, ¡ncluding people in the home
buìlding, government and academic communit¡es. MRP has s¡mply taken up the ¡dea and run w¡th it
because we believe that it is a positive solut¡on to this crisis, part¡cularly for secur¡t¡zed mortgage
Ioa ns.

What other solutions are being offered? Are they work¡n9? what makes this ProPosal
any better? There are a number of government programs designed to encourage loan
modifications. However, these apparently do not provide sufficient ìncentives for securitized loan
serv¡cers who bear the cost and the risk of modifying a loan, with the trust investofs reap¡ng the
benefits of a successful modifìcation. Moreover, the exist¡ng programs do not adequately deal with
conflicts of interest among serv¡cers, secur¡tization trust investors, and second mortgage holders. As
a result, few modifications have occurred, and most have been unsuccessful, part¡cularly for
securitìzed loans. Our proposal is better because we will cause the purchase of all loans encumbering
a home, with the freedom to effect any modification, ¡ncluding write-downs'

4.

How does this affect the borrower's cred¡t? The effect on a borrower's cred¡t will depend
upon the resolution of the mortgage loan that he or she agrees to. we expect that the effect will be
no woTse than it would be w¡thout em¡nent domain and will be better for the borrower if MRP is able
to affect a refinancìng or a modificat¡on that the eXisting seTVicer would not have perm¡tted.

5.

How will this help home values, or will ¡t? we expect that the program will stabilize home
prices by reducing defaults and the result¡ng forced sales of hornes and by reducing the overhang of
future expected foreclosuTes,

6.

[,lorlg¿ge Rasoiuljoß Pãrtn€r s LLC

1750 l'loniqorÌery SirccL, Ste 127

1

5¿¡ Fr'¡Ìr.: sco, CA'14111 415 954.8527

211

Case3:L3-cv-03664-JCS Documentl-7-L2

Fted08it22l13 PageS of 13
I\1ay

Frequently Askecl Questions

4, 2012

Page 7 af 12

Do you really bel¡eve this is go¡ng to work? Yes, so much so that we have personally risked
our time, our money and our reputations to get th¡s program up and running

7,

California has one of the highest percentages of at-risk loans and the highest
at-r¡sk loansof any stäte. It is a natural and efficient first state for the program.
dollaramountof
We expect to expand the program to other states once ìt ¡s up and running.

8, Why Cal¡forn¡a?

How will you choose the mortgages? We will partner with comm¡tted local governments that
have â sufficient volume of at-risk loans to allow us to make significant investments and make a
mean¡ngful difference to the community. fhe local government offices will help to ¡dentify which
areas we ass¡st, and each potential mortgage wiìl then 90 through the regular underwr¡t¡ng and
el¡9lbil¡ty process.

9.

10, What are your plans after the californ¡a p¡lot? Other cit¡es? other states?

We plan to
oppoÌtunity both inexpand beyond the pi¡ot¡ both in californ¡a and in other states. There is much
state and out-of-state to build on the progrâm's potential value.

11. How many borrowers have second mortgãges (l¡ke HELOCS), and how w¡ll you handle
them? We expect that a sign¡f¡cant peTcentage of borroweTs will have second mortgages. We
expect to reduce or eliminate the balance of the homeowner's second mortgage loan at the same
time as the first, e¡ther ¡n a voluntary transaction with the holder of the second or (¡f necessary) by
purchasing it through eminent domåin.

12. What reactions do you expect from the mãjor bank servicers?

We expect the serv¡cers to

¡n¡t¡ally oppose the program. HoWeVer, we hope that they w¡ll come to recognize thai the program
the best way to resolve the troubled loans in the securitization trusts for the benefit of all parties
involved ¡n the trust, ¡ncludìng the trust investors, the trustee, and the servicer.

is

MRP' third part¡es/ or both? Both. MRP will
determine the underwriting criteria for selecting loans based on the requ¡rements of third party
lenders, Fânnie Mae, Freddie Mac, the FHA, and other parties who will ultimately acquire, refinance or
guarantee the loans. We expect to work with th¡rd party mortgage profess¡onals in each participating
community to underwr¡te the new loans. This will br¡ng local expert¡se to the underwrit¡ng process
and support to the local economy.

13. Who w¡ll underwrite the new loans --

14, Won't you have to lend to unquälif¡ed borrowers ¡n order to keep people ¡n their
homes? How will you manage credit r¡sk? We w¡ll not refinance or modify loans for borrowers
who do not qualify. We will manage credít risk through underwrìting io the requirements of third
party lenders and guarantors, who will provide the ultimâte take-out for the loans. we may offer
other resolutions for homeowners who no longer qualify for loans, such as expedited consideration of
proposed short sales and accept¡ng a deed in lieu of foreclosure and potentially rent¡ng the home
back to them (via an appropriate partner)- In addition, a port¡on of the returns will be dedicated to
commun¡t¡es, which may use the funds to finance cornmunity housing or other needs

lúorlga0e Rcsôlutiorì Partners LLC

1750 l'ìontllofle.y

Strlet, Sie 127 Sôn Frôccrscc, CÀ94111 |415 954 8527

218

Case3:13-cv-03664-JCS DocumentlT-12

Filed19lZ2lI3 Pageg of l-3
May 4, 2O!2
Page I of 12

Frequently Asked QuestÌons

15. How will you deãl with competition from the major banks once you announce your
program? we believe that city and state governments may be unw¡llÌng to work wìth major banks
or other potentìal competitors because of the¡r or their affiliates' roles in creating or prolongìng the
mortgage cr¡s¡s. Other companies could in t¡me create s¡milar mortgage resolution businesses.
However, the inventory of d¡stressed mortgage loans ¡s unfortunately so great and so widespread
that there is room and need for other companies to operate in the space without adversely affecting
our business model.

16. Will you partner with existing lenders? Why or why not?

We expect to work with
selected ex¡st¡ng lenders as well as independent real estate professionals to ref¡nance the
homeowner's loans.

17. What cr¡teria will you use to select loans to acquire? we will work with each government

agency to determine the cr¡teria that best meet the community's needs - with the goal of keeping
homeowners ¡n their homes. We expect init¡ally to acqu¡re loans thai are sign¡ficantly underwater/
but which are current (not in default). Subsequently, we may expand the program to acquire loans
that are in default, but where the homeowner can afford a refinanced loan w¡th a reduced principaì

amount,

1g. If you are successful in modifying loans and reducing principal, won't the homeowner
be taxed on the reduct¡on? Through 2o12, both federal and california laws forgjve the tax for
debt used to purchase or improve the home. If the borrower used the proceeds for other purposes'
like buying a boat, then the reduct¡on may be taxable. Even after 2012, debt forgiveness generally
may not be taxabìe to the extent the borrower's total debt exceeded total assets, whlch we expect
will be the case for many homeowner partic¡pants. The program will be voluntary for homeowners,
so they will determ¡ne whether to padiclpate based on their own circumstances, ìncludìng the¡r own
tax positìon. lyRp will not provide tax advice, and will urge potent¡al participãnts to seek such advice'

19. How long will this take?

We expect a per¡od of 4 to 12 months from the beginning of the

borrowers'opt-in period untÌl completion of loân refinancing.
2O. We,ve seen what outsourc¡ng d¡d to loan modif¡cation programs with the b¡9 banks, If
you are going to outsource' how can you ensure quality? Many of the problems wlth
outsourcing have come from confl¡cts of interest that the large bank servicers have. They bear the
high costs of servicing troubled loans and negotiating modifications, but they do not get the benefits
of a successful mod¡f¡cation. This has led them to outsource to firms that w¡ll foreclose as qu¡ckly and
cheaply as possible. we intend that our program's investors will acquire all of a homeowner's
mortgage loans and bear the r¡sk and returns of restructuring the loans, so our program will not have
jnterest for
this conflict of interest. We will closely monitor all service providers because it is in our
them to do their jobs r¡ght.

l,lortgage ResolLrlìoD Pârtners LLC

1750 lfontqomery Stfect, Sle 127 IS¿nFrôic¡s.o, CA94111 475t54 F'571

2t9

Case3:13-cv-03664-JCS DocumentlT-l-2
Frequent¡y Àsked Questìons

Filedjgl22ll3

Pagel-O of L3
May 4, 2012
Page 9 of 12

sEcTIoN FoUR: ECONOMICS
How can the loãn purchasers earn a profit ¡f they pay fa¡r value for ã loan - and won't
the trusts have a free look bãck to demand more compensation in court? lvlRP and the loan
purchäsers can pay faìr value and st¡ll earn a profit because they will take the risks and earn the
returns of acquìring underwater ìoans and then ref¡nancing them. Many investment funds purchase
distressed whole loans from þank portfolios in consensual transact¡ons and then prof¡t by work¡ng
them out; we expect our loân purchasers to pay the same pr¡ce that they do. We will seek to provide
appropriate reserves for look back risk based on the court's ultimate determinat¡on'

lr

2.

How w¡ll MRP make money? MRP intends to earn fees that are simple and tränsparent based
in pad on its success in obtaining contro¡ over and modifying or otherw¡se resolv¡ng the loðns.

3, Will you share profits with the communit¡es? We expect to contribute to the communit¡es (or
not-for-profit organizations) a fixed amount per loan acquìred, wh¡ch may support community
housing needs.

How have you structured this to create the various profit marg¡ns you w¡ll need?
Who pays for the legal fees? The structure of the loan acquis¡tions and the expected loan
resolut¡ons Will create the necessary profit margìns to pay for program costs, includlng funding costs

4,

and legal fees.

[4orlq¿qe Resolulion Par!¡ers LLC

1750,.1o¡lgorìrerf Slrcct, Sie 127 I 5¿n Frêfci5co, CA 94111 | 415.954.8527

220

Case3:13-cv-03664-JCS DocumentlT-12

Filed08l22ll3 Page11 of 13
May 4,2072
Page 10 of 12

Frequently Asked Questions

SECTION FIVE: GOVERNMENT

1. Eminent doma¡n is already so controversial, Are you concerned about how th¡s w¡ll

be

perce¡ved? Eminent domaìn is controversial when ¡t displaces homeowners to help unrelated
investors. The program will use eminent domain to help homeowners, and we expect it to show that
local governments are part of the solut¡on, not part of the problem,

2. What about the bigger picture? Isn't this go¡ng one step fuÌther to disempower private
businesses and empower the government? No. Eminent domain is an inherent power of
American governments, one that they have used throughout our nation's history. It is such a
fundamental part of government that the US Const¡tut¡on expressly perm¡ts it, as long as the
government has a public purpose and pays fair value for the Property Moreover, the government
ent¡t¡es will not enter the mortgaqe loan bus¡ness or displace any moltgage compan¡es.
Eminent domain is a governmental action to
achieve governmental objectives, and the objectives are clear -- to reduce the harm that the
res¡dential home loan cr¡sis ¡s causing our communit¡es, to stabilize ne¡ghborhoods, änd to support
local economic activity.

3, Is there an ulterior political mot¡ve here? No,

4. I read something in the WSJ about a program that Pres¡dent obama was cons¡dering
Is th¡s ¡t? No. Our program is a local one controlled by local city and county governments,
supported by private lnvestment funds.

5. How will this affect property taxes? By resolv¡ng underwater loans moTe efficiently with
fewer foreclosure sales, we expect the program to stabilize the property tax base and to help colleci
delinquent property taxes.
6. If this is such ã good solution, why didn't the government

do this instead of the bank

bailouts? Our program addresses a djfferent problem and offers a different solut¡on, The federal
government acted to prevent â national financial collapse; thêt prob¡em required a nat¡onal solut¡on
at a scale that only the federal government could prov¡de The residential mortgage loan crisis
affects individual communìt¡es diflerently and requires a local solut¡on. We can implement the
solut¡on on a ìocal scaìe, funded with private cap¡tal.
We regard ¡t as unlìkely that lending institutions
would "redline" or "blackball" a city for exerc¡sing a sovereign r¡9ht. Banks are ¡n the business of
mak¡ng ìnterest margin, and we believe that they will seek to do so \ rherever the opportun¡ty ar¡sesPun¡shing communities is not good for business. Also, there are legal strictures that may prevent
such retaliat¡on (such as the Communìty Reinvestment Act)

7, w¡ll part¡cipating cít¡es be blackballed?

How have you planned to budget for all of the legal costs that will come out of this?
Espec¡ally for the participating mun¡cipal¡ties, how will you put their fears at rest
regarding this? We have budgeted for extensive legal fees. IVRP's f¡nancial model provides that

8.

n¡o

rtgage nesolutiorì Partners LLC

1750 i'1lo¡tgonìcrv

strecl, ste 127 I 5a¡

Fr¿ncìsco, cA

941l1 | 415.954.8527

221

Case3:1"3-cv-03664-JCS Documentl-7-12
FrequeDtly Asked Questions

Filecl)Bl22lL3 Pagel-2 of 13
May 4, 2012
Page 11 of 12

funding sources and the margins from the loan acquisitions and ref¡nanc¡ngs wilì directly pay all legal
costs of condemnation and vêluat¡on actions.

9, what liabil¡ty do the participating municiPalities have? The particìpat¡ng governments or
jo¡nt powers authoritìes w¡¡l be liable to pay the fair value of the loans as well as certain legal costs
and fees. MRP and its funding sources wìll pay for these costs as described in the answer to FAQ L

lVoriqaqe Resolulion Pârlners LLC

1750 l'4ontgomer] Sheet, ste 127 I Sên Fr¿ncisco, CA9411l ) 415.954.8527

222

Case3:L3-cv-03664-JCS DocumentLT-12

Filed08l22lL3 Page13 of l-3
¡lay 4, 2oI2

Frequently Asked Questions

Page 12 of 12

SEGTION SIX: oRGÀNIZATION/ FOUNDERS

t.

Who is MRP? MRP is the manager of this resolution program. It will obtain the funding to pay
for the acquired loãns, and ¡t w¡ll manage the process of resolving the loans.

2. Where w¡ll your corporate off¡ces and operations be based? ¡4RP's off¡ces and operations
are based in San Francisco. As we implement the program we wÌll work w¡th the ¡ndependent real
estate servìce community in each partic¡pating community, which should contríbute to the local
economy. MRP may open additional offices in other cities and states as the program expands.

3,

who is Gordian sword and what role does it play?

Gordian Sword ¡s the company that the
program's founders set up to help create the program and to manage Mortgage Resolution Partners,

4, Why LLcs?

Lim¡ted liab¡lity compan¡es are a typlcal form of organizat¡on for ¡nvestment and
¡nvestment management bus¡nesses. They operate w¡th the fìexibility of partnerships while prov¡ding
all investors with limited liability like shareholders in a corporation'

l¡ortgage RcsolLition Parlrrars Ll,C

1750 ¡1o¡Ì-dorì€ry Slreel, SLe 127 | S¿n F-¿ncìsco, CA 94111. 415.95,1.8527

223

CERTIFICATE OF SERVICE

1

2

I, Elena Griffin. declare:

3

I am en'rployed in Los Angeles County, Califomia. I am ove¡ the

age ofeighteen yeats

4

and not a pafiy to the within-entitled action. My business address is Mayer Brown LLP, 350

5

South Grand Avenue, 25th Floor, Los Angeles, Califomia 90071-1503.

6

I certify tliat I electronically filed the foregoing:

'7

NOTICE OF ENfRY OF ORDER PURSUANT TO STIPULATION FOR FILING

8

SECOND AMENDED COMPL,A.INT
with the United States District Court, Norlhem District of California, using the CM/ECF

9
10

system on August 26, 201 3.

Participants ur the case who have appeared and are registered CM/ECF users will be

i1
12

serwed by the CM/ECF system.

I further cerlify that some ofthe parlicipants in the case have not yet appeared iu the

13

case.

1.4

I have dispatched the foregoing document to a third party comrnercial carrier for delivery within

15

3 calendar days to the

lollowirig parties:

16

r'7
18
19

20

Scott A. Kronland
k' on I a n d@,a I t s h ul e r b er z o n. c o nt
Altshuler Berzon LLP
177 Post Street
Suìte 300
San Francisco, CA 94108
Attontey.[or City oJ Richmond, Richmond City
Cotmcil, Mortgage Resolution Ptrtners LLC,
and Gorditut Sword LLC
s

21

22
23

Executed August 26, 2013, in Los Angeles, Califomìa.
24
25
26

Elena

27
28
CERTIFICATE OF SEIìVICE
NO. 13-CV-3664-CRB

/,^¿,+