Friday, December 24, 2010
In an interesting variation on "coming to the nuisance," the Los Angeles Film School has moved next door to the Hollywood Farmers' Market and is now contesting renewal of the market's permit. Apparently, the market - which operates only on Sunday - blocks access to one of the school's parking lots. There's a Joni Mitchell song in there somewhere. Read about it in The New York Times.
Jamie Baker Roskie
Thursday, December 23, 2010
Adam J. Levitin (Georgetown) and Tara Twomey (Nat'l Consumer Law Center, Nat'l Ass'n of Consumer Bankruptcy Attys) have posted Mortgage Servicing, Yale Journal on Regulation, Vol. 28, No. 1 (2011) [first 2011 pub date on the blog so far?]. The abstract:
This Article argues that a principal-agent problem plays a critical role in the current foreclosure crisis.
A traditional mortgage lender decides whether to foreclose or restructure a defaulted loan based on its evaluation of the comparative net present value of those options. Most residential mortgage loans, however, are securitized. Securitized mortgage loans are managed by third-party mortgage servicers as agents for mortgage-backed securities (“MBS”) investors.
Servicers’ compensation structures create a principal-agent conflict between them and MBS investors. Servicers have no stake in the performance of mortgage loans, so they do not share investors’ interest in maximizing the net present value of the loan. Instead, servicers’ decision of whether to foreclose or modify a loan is based on their own cost and income structure, which is skewed toward foreclosure. The costs of this principal-agent conflict are thus externalized directly on homeowners and indirectly on communities and the housing market as a whole.
This Article reviews the economics and regulation of servicing and lays out the principal-agent problem. It explains why the Home Affordable Modification Program (“HAMP”) has been unable to adequately address servicer incentive problems and suggests possible solutions, drawing on devices used in other securitization servicing markets. Correcting the principal-agent problem in mortgage servicing is critical for mitigating the negative social externalities from uneconomic foreclosures and ensuring greater protection for investors and homeowners.
Robert B. Avery & Kenneth P. Brevoort (Federal Reserve) have posted The Subprime Crisis: How Much Did Lender Regulation Matter? The abstract:
The recent subprime crisis has spawned a growing literature suggesting that regulatory preferences for lower-income borrowers and neighborhoods, embodied by the Community Reinvestment Act (CRA) and affordable housing goals for the Government Sponsored Enterprises, Fannie Mae and Freddie Mac (GSEs), may have caused or contributed to the crisis. For the most part, the empirical analyses presented in this literature have been based on associations between aggregated national trends. In this paper we examine more directly the links between these regulations and outcomes in the mortgage market, including measures of loan quality and delinquency rates. Our analysis has two components. The first component focuses mainly on the CRA. We argue that historical legacies create significant variations in the type of lenders that serve otherwise equal neighborhoods and that, because not all lenders are subject to the CRA, this creates a quasi-natural experiment of the impact of the CRA. The second component of our analysis uses all lenders but takes advantage of the fact that both the CRA and GSE goals rely on clearly defined geographic areas to determine which loans are favored by the regulations and which are not. Using a regression discontinuity approach, our tests compare the marginal areas just above and below the thresholds that define eligibility. We argue that if the CRA or GSE goals had an impact, it should be clearest at this point. We find little evidence that either the CRA or the GSE goals played a significant role in the subprime crisis. Our lender tests indicate that areas disproportionately served by lenders covered by the CRA show less, not more, evidence of risky lending or ultimately higher mortgage delinquency rates. Similarly, the threshold tests show no evidence of a regulatory effect.
December 23, 2010 in Community Economic Development, Federal Government, Financial Crisis, Mortgage Crisis, Mortgages, Politics, Real Estate Transactions, Scholarship | Permalink | Comments (0) | TrackBack (0)
Richael Faithful (American U) has posted An Idea of American Indian Land Justice: Examining Native Land Liberation in the New Progressive Era, forthcoming in the National Lawyers Guild Journal. The abstract:
This article is inspired by Professor Robert Odawi Porter’s remarks during the 2009 D.C. Federal Indian Bar conference in which he outlined a seemingly radical proposal for “land liberation” for American Indian tribes – the abandonment of United States trusteeship over tribal land, and return of title and associated rights to numerous tribes who have lost their land due to nefarious governmental policies and bad deals. In an effort to bridge Porter’s visionary legal viewpoint with renowned economist and philosopher, Amartya Sen’s recent visionary contribution on justice, An Idea of American Indian Land Justice, helps revive an Indian law, critical studies tradition calling for greater tribal sovereignty, but in a new light, however, that examines a global political climate that embraces the human rights mantle to one degree or another. This article tries to illuminate two liberationist outlooks to scrutinize a legal proposal by a leading mind in Indian law that also has wide-reaching implications for other movements, struggles, and communities across the world.
Wednesday, December 22, 2010
This trend appears to be picking up speed as 1) urban markets remain relatively undeveloped for many big boxes, 2) zoning laws continue to restrict new mega-sized buildings, and 3) same store sales remain relatively flat even for newer big boxes.
Here's another story discussing the somewhat oxymoronic situation of smaller, big boxes:
Retailers have been following the growth of the suburbs for decades, setting up in shopping centers and big-box strip malls far outside the core of major American cities. Department stores that stayed in big-city downtowns have suffered. Others didn't stay -- they closed up altogether.
But a reversal of that trend is becoming apparent. Big-box retailers -- companies that built their discount businesses out where land was cheap and space was plentiful -- are now moving inward.
Both Wal-Mart and Target are prime examples of big-box stores with big-city plans. They're aiming at the likes of Chicago, Los Angeles, New York, Seattle and Washington, D.C.
Chad Emerson, Faulkner
Last week my dad sent me a link to this article, about Hansjorg Wyss, a wealthy maker of medical devices, and his campaign to buy and conserve up to one million acres in the mountain west.
In an exclusive interview with The Associated Press, Wyss, 75, said he first became enamored of the Rockies as a college student who toured the region in 1958. And he defended his actions against those who chafe at the prospect of an outsider buying up land that in some cases has been logged, ranched or farmed for generations.
"Look, these are beautiful landscapes," Wyss said. "There was controversy when Yellowstone (National Park) was created and when they declared the Grand Canyon as a National Monument. But there are areas in the United States that must be protected."
As the article notes, Wyss isn't the first billionaire to buy lots of Montana land. Ted Turner famously bought and conserved millions of Montana acres in the '90s and the '00s. And Wyss isn't the first businessperson turned conservationist to create controversy. Consider, for example, apparel moguls Kris and Doug Tompkins (of Patagonia and Esprit fame, respectively) who bought up large swaths of Chile and Argentina in what came to be know as "The Green Land Grab." In 2003 one Newsweek writer noted:
For any developing nation, an economic crisis may not be the best time to retire open lands from commercial use. But much of the land for sale in Patagonia has been so overgrazed that ranchers describe it as pelado, or peeled, anyway. So far, Argentines have been too busy protesting international bankers to take much notice of the land rush, but that could change, warns Buenos Aires political analyst Felipe Noguera: "There is the potential for Argentines to feel that yet more of the family silver has been sold off to foreigners." Arguably, if Argentina has to sell off land, better to sell to green tycoons for public nature preserves than to other tycoons for private playgrounds. But it's not clear a financially battered populace would make such distinctions.
It's an open question whether it's a great idea for any nation, developed or developing, to permanent conserve thousands of acres of potentially productive land. But there's no question that the Rockies, and the Andes, are landscapes that are part of our collective environmental heritage. Whether we can conserve these unique areas while allowing the local population to make a living has been an active question for many years. Obviously the last word has yet to be written.
Jamie Baker Roskie
Most banks were not prepared to foreclose and own hundreds-of-thousands of properties. The housing bust required a range of mass-scale foreclosure and re-sale processes unfamiliar to these lenders and mistakes soon followed. National media reported on notary fraud and other irregularities in the foreclosure process.
Andrew Martin in the New York Times now reports a rise in bank break-ins.
In Texas, for example, Bank of America had the locks changed and the electricity shut off last year at Alan Schroit’s second home in Galveston, according to court papers. Mr. Schroit, who had paid off the house, had stored 75 pounds of salmon and halibut in his refrigerator and freezer, caught during a recent Alaskan fishing vacation. (emphasis added).
Lacking power, the freezer’s contents melted, spoiled and reeking melt water spread through the property and leaked through the flooring into joists and lower areas.
Of course, banks are not without excuse. Many mortgages allow lenders to enter a property in default and secure it, if deemed abandoned. From the apparent rise in unwarranted bank break-ins, however, it seems lenders expend little effort in determining whether such homes are truly abandoned.
In another case, a homeowner in default was still negotiating loan modification when the bank broke in and took everything:
Near Halloween 2008, work crews broke in and cleaned out the place, taking Persian rugs, china, furniture bought on a trip in Peru, skis, photos of her marriage and childhood in Iran. Her husband’s ashes were taken from the couple’s master bedroom.
Certainly a spike in volume of foreclosures accounts for the increase in such break-ins. But should volume excuse unwarranted break-ins? It will be interesting to track the lawsuits brought against lenders in the following months.
Tuesday, December 21, 2010
A reminder from the folks at EPA:
The 10th annual New Partners for Smart Growth: Building Safe, Healthy
and More Livable Communities Conference in Charlotte, NC is right around
the corner — February 3-5 in fact! This is the largest and most
comprehensive conference focused on smart growth and sustainable
communities held in U.S. each year, and not one to miss.
The multi-disciplinary program includes dynamic plenaries, in-depth
implementation workshops, cutting edge breakouts featuring the latest
research, case studies, tool and strategies, and tours of local model
projects. The line-up of over 400 speakers is stellar, with
international and national expertise mixed with local and regional “know
how.” We expect 95% of the over 100 sessions to be AICP accredited.
The program this year also has a strong underlying them of financing and
capacity-building — important and timely topics for state and local
governments, NGOs, and the grassroots organizations working in the
trenches on critical smart growth issues across the country.
Additional emphasis is being placed this year on providing as many
networking opportunities for participants as possible. Beyond the usual
informal networking opportunities offered — the number one reason people
attend this event — conference planners are organizing networking forums
that will focus timely issues such as: the unique challenges of smart
growth in small towns and rural areas; new federal technical assistance
for sustainable communities; advocacy building at the local and national
level; continuing the conversation on better connecting environmental
justice, equitable development and smart growth; smart growth
strategies, tools and resources in southern states; and Health Impact
Assessments for new and experienced practitioners. We expect others to
be added before and during the conference.
SIGN UP NOW! The conference registration deadline is January 14th!
Register at http://www.newpartners.org/registration.html.
The deadline to receive the reduced group rate for this event ($95) at
the Westin Charlotte Hotel is January 10th. Call 1-866-837-4148 and
indicate that you are attending the New Partners Conference.
Jamie Baker Roskie
Monday, December 20, 2010
The common law has long encouraged the use and development of land.
This policy favoring land use and development certainly made sense during America's infancy, when the country boasted seemingly inexhaustible stretches of land. But today you cannot find property that is not subject to zoning restrictions. What seemed unlimited is now increasingly scarce. Over-develpment generates multiple problems ranging from pollution to species endangerment. Forty million acres of land - larger than the state of Florida - were newly developed between 1992 and 2007.
One of the reactions to perceived over-development and receeding "wild" lands is the conservation easement, which is (generally speaking) a voluntary agreement to refrain from developing land. Much has been written about the effectiveness of this legal tool, but the arguments in this recent online publication seem disingenuous. The article characterizes the conservation easement as a clever tool wielded by a surreptitious government. The article warns private landowners to be wary of the conservation easement and the government's desire to restrict their rights.
Land trusts exist to remove private property from production.
They do this by acquiring ranch, farm, forest, or other private land either through donation, purchase, or by acquiring CEs to property as well as water. They act as unofficial arms of government agencies—third party intermediaries or ‘land agents’—and routinely flip (sell) donated as well as purchased land and CEs to these government agencies. When they do, they’re paid with tax dollars which, in turn, are used to purchase more private property.
The Conservation Easement is vulnerable to many legitimate criticisms; that it is a tool enabling a government conspiracy to rob private landowners should not be among them.
Tim Iglesias (San Fransisco) sends word that he has posted State and Local Regulation of Particular Types of Affordable Housing, forthcoming in The Legal Guide to Affordable Housing Development, Tim Iglesias & Rochelle E. Lento, eds. (American Bar Ass'n 2011). The abstract:
This chapter is part of "The Legal Guide to Affordable Housing Development", a practical guidebook covering most important areas of law that apply to affordable housing development. This chapter analyzes a wide variety of state and local regulation affecting the development of several types of affordable housing which are neither traditional single family nor multi-family. Specifically, the chapter discusses statutes, ordinances, regulations and leading case law concerning the siting of manufactured housing (Section II), farmworker housing (Section III), accessory or secondary units (Section IV), single room occupancy hotels (SROs) (Section V), condominium conversion regulation (Section VI), and emergency shelters and transitional housing, including domestic violence shelters (Section VII).
Sounds like a very helpful overview of the crucial state and local government role in affordable housing. The book looks like a great resource; Prof. Iglesias indicates that it will be out in May 2011 at the annual conference of the ABA Forum on Housing and Community Development Law in D.C.
December 20, 2010 in Affordable Housing, Books, Community Economic Development, Conferences, Development, Housing, Local Government, Scholarship, State Government | Permalink | Comments (0) | TrackBack (0)