Thursday, June 30, 2022
Home Business Plan Steven Gluckstern, Who Pushed for Mortgage Relief, Dies at 71

Steven Gluckstern, Who Pushed for Mortgage Relief, Dies at 71

A financial executive and sometime sports entrepreneur, he was thwarted in his quixotic quest to help homeowners with underwater mortgages during the Great Recession.

Steven Gluckstern, a wide-ranging financial executive and sometime sports entrepreneur whose quixotic plan to offer relief to struggling homeowners in the aftermath of the Great Recession was thwarted by the banking and real estate industries, died on May 29 at his home in Santa Fe, N.M. He was 71.

His wife, Judy (O’Connor) Gluckstern, said the cause was glioblastoma, an aggressive brain cancer.

In 2011, Mr. Gluckstern began approaching municipalities around the United States to pitch a proposal to help homeowners who, during the severe economic downturn, had seen their mortgages go underwater — that is, they owed more than what their houses were worth.

“This is a yoke around the American economy,” he told the New York Times opinion columnist Joe Nocera in 2012. “When people are underwater, their behavior changes. They stop spending.” He added: “Is the answer to really just let them get foreclosed on? Or wait for housing prices to rise?”

Mr. Gluckstern proposed reducing the principal owed by homeowners by having local governments partner with investment funds that he had identified, then use eminent domain to condemn and purchase, at fair market value, local underwater mortgages that were held in complex securities that had been sold to investors. The governments would then use federal and state programs to arrange affordable mortgages.

John Vlahoplus, who was the chief strategy officer of the advisory company Mortgage Resolution Partners at the time, said in an email that Mr. Gluckstern had been involved in all phases of the business, but that he was “most remembered as its public face — a committed, tireless and enthusiastic advocate for homeowners and their communities.”

Mr. Gluckstern made some headway in cities like Salinas and Richmond, Calif., and found favor with some public officials, including Gavin Newsom, who was then the lieutenant governor of California and is now the governor. But he met stiff opposition from the banking and real estate interests and, ultimately, the federal government.

Financial and real estate groups threatened lawsuits. The Securities Industry and Financial Markets Association, a trade group, insisted that the “recently proposed plans regarding the use of eminent domain to seize mortgage loans are unconstitutional on multiple grounds and violate federal and state laws.”

In August 2013, the Federal Housing Finance Agency vowed to cut off mortgage lending by the mortgage finance giants Freddie Mac and Fannie Mae in localities that used eminent domain to seize underwater mortgages. The chief executive of Fannie Mae, Timothy J. Mayopoulos, told The Los Angeles Times that the use of eminent domain “has the potential to unsettle investors in mortgage securities.”

By the end of 2014, Mr. Gluckstern’s plan was dead. A section of the $1.1 trillion omnibus spending bill passed by the U.S. Senate included a provision that prohibited the Federal Housing Administration, the Department of Housing and Urban Development, and Ginnie Mae (the Government National Mortgage Association) from refinancing, or replacing, any mortgages seized through eminent domain.

“He knew going into it that it might be impossible,” Judy Gluckstern said in a phone interview. “He was frustrated, but he didn’t let any grass grow. He moved on to the next thing.”

Mr. Gluckstern’s next ventures included being a founder and owner of a new independent minor league baseball team, the Chicago Dogs, in 2018, and helping to start element6 Dynamics, a hemp business, in New Mexico, also in 2018

Steven Mark Gluckstern was born on May 1, 1951, in New Haven, Conn. His mother, Norma (Block) Gluckstern, was a psychologist who in the 1980s was the director of the maximum security Patuxent Institution in Maryland; his father, Robert, was a nuclear physicist and chancellor of the University of Maryland.

Two years after graduating from Amherst College with a bachelor’s degree in psychology and natural sciences in 1972, Mr. Gluckstern earned a doctorate in organizational change at the University of Massachusetts, Amherst.

That year, he founded an alternative educational program for seventh and eighth graders at a junior high school in Scarsdale, N.Y., where he taught math and science. He then served as principal of an elementary school in Tehran and was an educational consultant and the superintendent of schools in Telluride, Colo., during the 1980-81 school year.

With a growing interest in business, he received an M.B.A. from Stanford University, which led to an entry-level investment banking job at Lehman Brothers. Two years later, he was named chief financial officer of Healthco, a dental products company that Lehman had taken public.

A chance meeting with an insurance executive led to his hiring in 1985 as the general manager of the reinsurance business of Berkshire Hathaway, the holding company run by the billionaire Warren Buffett.

Reinsurance is insurance for insurance companies, a way to help insurers transfer the risk of insuring cars, homes and businesses. Mr. Gluckstern told The Wall Street Journal in 2005 that he “could barely spell the word ‘reinsurance’” when he took the job. But, he added, “in some businesses, there’s a value in not knowing anything because there is no conventional wisdom.”

Mr. Gluckstern and Michael Palm, a friend from the school in Tehran, began writing multiyear policies that offered clients rebates if they minimized their claims. It was an innovative niche in the insurance business, known as “finite risk” insurance, and it was the basis of Centre Reinsurance, a company they started in Bermuda in 1988.

After selling Centre Re, as it came to be called, to Zurich Insurance in the early 1990s, Mr. Gluckstern remained an executive at the company for several years.

Vic DeLucia/The New York Times

During that period, he began his detour into sports ownership. In 1995, he and Richard Burke acquired the Winnipeg Jets of the National Hockey League for $68 million, then moved the team to Phoenix, where it was renamed the Coyotes, in time for the 1996-97 season.

In early 1998, Mr. Gluckstern sold his 50 percent interest in the team to Mr. Burke in order to buy the Islanders for $195 million with two partners, the real estate executives Howard and Edward Milstein.

But Mr. Gluckstern and the Milsteins did not keep the team for long. Saddled with a bad lease at Nassau Coliseum on Long Island and unable to make a financial deal with Nassau County to build a new arena, they sold the team in 2000 for nearly $190 million to Charles Wang, the chairman of Computer Associates, and Sanjay Kumar, the company’s president.

Soon after, Mr. Gluckstern started Azimuth Trust, an asset management firm that he ran until 2005. From 2008 to 2018, he was a founder of several neuroscience companies. In 2018, he helped start and fund the Take Back the Court Action Fund, which advocates for the expansion of the Supreme Court.

In addition to his wife, Mr. Gluckstern is survived by his mother; his daughter, Sarah Gluckstern; his son, J.D. Gluckstern; a granddaughter; and his sisters, B.J. Greenspan and Amie Yabroff.

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