Monday, February 25, 2013
I am just finished streaming the press conference for the release of the Bipartisan Policy Center's Housing Commision Report. Led by its Co-Chairs, Sens. George Mitchell, Mel Martinez and Kit Bond, as well as former HUD Secretary Henry Cisneros, the Commission is offering a far-reaching set of recommendations regarding the housing finance system, public subsidy for affordable housing development and preservation (particularly in rural areas) and promotion of housing counseling as a vital resource. Even if the Executive Summary is too long for you, I would encourage you to check out a two-page article available on Politico authored by the four co-chairs.
Thursday, November 15, 2012
Andra C. Ghent (Arizona State--Finance) has posted The Historical Origins of America's Mortgage Laws. This paper would be a really good resource for students, teachers, or practitioners who are interested in a concise but explanatory introduction to the development of state mortgage laws, including mortgage theory, foreclosure, and other important topics. The paper is a report for the Research Institute for Housing America. The abstract:
This paper examines the different legal frameworks for mortgage markets in different states, focusing on how and when they came into existence, including the British influence on laws in some of the older states, with a particular emphasis on foreclosures, including judicial vs. non-judicial regimes, redemption rights and deficiency judgments. The paper concludes that mortgage laws in America are a patchwork driven by path dependence, rather than a coordinated effort or a reaction to some economic event or condition.
Tuesday, October 9, 2012
This month's installment of the ABA Section on Real Property's "Professor's Corner"--a free monthly teleconference featuring scholars' takes on important new property cases and issues--will feature a really hot topic, the proposal for municipal governments to take property by eminent domain to combat the mortgage/foreclosure crisis. The info, via David Reiss (who also recently posted a related public comment):
The program is Wednesday, October 10, at 12:30 pm EDT; 11:30 am CDT; 10:30 am MDT; 9:30 am PDT.
Participant Passcode: 5577419753
This month’s topic is Can/Should Municipalities Use Eminent Domain to Take Mortgages to Facilitate Mortgage Modifications? This conference call will be moderated by Professor James Geoffrey Durham, University of Dayton School of Law. Professor Steven J. Eagle, Professor of Law, George Mason University School of Law, is one of the nation’s leading scholars on eminent domain and regulatory takings. Professor Eagle will discuss whether it is possible for local governments to use eminent domain to acquire notes secured by mortgages in order to resell them to a private party which will then modify them, both under the 5th Amendment to the U.S. Constitution and also under state constitution taking clauses as they have been limited by amendments and statutes seeking to define what is a public use. Professor Robert C. Hockett, Professor of Law, Cornell Law School, is the scholar who in June proposed that municipalities could use eminent domain to acquire mortgages, in order to facilitate mortgage modifications to benefit underwater homeowners, in his article: It Takes a Village: Municipal Condemnation Proceedings and Public/Private Partnerships for Mortgage Loan Modification, Value Preservation, and Local Economic Recovery (download paper). Professor Hockett will discuss his proposal, which has received widespread attention. Professor Dale A. Whitman, James E. Campbell Missouri Endowed Professor Emeritus of Law, University of Missouri, Columbia, School of Law, is one of the premier experts on American property law and one of the nation’s foremost mortgage law scholars. Professor Whitman will discuss the impact that implementation of Professor Hockett’s proposal might have on the mortgage markets.
Check out the free telecast on this very interesting and current issue.
October 9, 2012 in Conferences, Eminent Domain, Financial Crisis, Housing, Local Government, Mortgage Crisis, Mortgages, Property, Real Estate Transactions, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)
Thursday, October 4, 2012
David J. Reiss (Brooklyn) has posted Comment on the Use of Eminent Domain to Restructure Performing Loans, which was submitted to the Federal Housing Finance Agency (No. 2012–N–11) (2012). The abstract:
There has been a lot of fear-mongering by financial industry trade groups over the widespread use of eminent domain to restructure residential mortgages. While there may be legitimate business reasons to oppose its use, its inconsistency with Takings jurisprudence should not be one of them. To date, the federal government’s responses to the current crisis in the housing markets have been at cross purposes, half-hearted and self-defeating. So it is not surprising that local governments are attempting to fashion solutions to the problem with the tools at their disposal. Courts should, and likely will, give these democratically-implemented and constitutionally-sound solutions a wide berth as the ship of state tries to right itself after being swamped by a tidal wave of mortgage defaults.
A concise and thoughtful public comment on what is emerging as a hot, hot issue.
October 4, 2012 in Constitutional Law, Eminent Domain, Finance, Housing, Local Government, Mortgage Crisis, Mortgages, Property Rights, Real Estate Transactions, Scholarship, State Government, Takings | Permalink | Comments (0) | TrackBack (0)
Monday, September 10, 2012
Adam J. Levitin (Georgetown Law) and Susan Wachter (Penn--Wharton--Real Estate) have posted Why Housing?, Housing Policy Debate, vol. 23 (2012). The abstract:
come and go. Only the housing bubble, however, brought the economy to its knees.
Why? What makes housing uniquely a cause of macroeconomic risk?
This Article examines the workings of the housing market as well as theories and empirical evidence about the housing bubble. It explains why housing is a particular source of macroeconomic risk and how changes in the housing finance channel were the critical element in the formation of the bubble.
Interesting stuff. A lot has been written about the mortgage/financial crisis, but this is a good point in time for looking back with a more long-term perspective.
Sunday, August 19, 2012
Gregory M. Stein (Tennessee), who has written a bunch on real estate and land use in contemporary China, has posted Is China's Housing Market Heading Toward a US-Style Crash?, Arizona Journal of International and Comparative Law, Vol. 29, No. 1, 2011 . The abstract:
This article aims to determine whether China is heading toward a U.S.-style market crash in its housing market. Rather than attempting to maintain any suspense, I will disclose here that my conclusion is, “Who knows?” China and the United States have dramatically different histories, cultures, governments, economies, and legal systems. Anyone who claims to have a definitive answer to this question is overly confident.
My more modest goals in this article are to examine the available evidence and see which way it seems to point. The article begins by listing and describing several different ways in which the American housing market failed. It then evaluates the consequences of these failures for the U.S. housing market. Next, the article demonstrates some of the key respects in which the Chinese market differs from the market in the United States. This central portion of the article emphasizes just how difficult it is to make predictions about what might happen in one nation’s housing market based on the experiences of another nation that differs in so many significant ways. Finally, the article provides a description of some of the worrisome similarities between the Chinese and American housing markets. To the extent the previous analysis may have comforted the reader into believing that the Chinese market is unlikely to experience a downturn anytime soon, this last discussion will create some apprehension by highlighting some of the ways in which China might, in fact, be heading down the same path as the United States.
Saturday, August 11, 2012
There has been some discussion over the past couple of months over an innovative proposal to have governments use the eminent domain power to take ownership of underwater mortgages, to decrease the risk of default and then refinance the obligations, all to promote the common good. Here are some links to give you a sense of the major points of this debate.
The launch of this idea comes from a proposal by Law Professor Robert C. Hockett (Cornell) in his piece It Takes a Village: Municipal Condemnation Proceedings and Public/Private Partnerships for Mortgage Loan Modification, Value Preservation, and Local Economic Recovery. The abstract:
Respected real estate analysts now forecast that the U.S. is poised to experience a renewed round of home mortgage foreclosures over the coming 6 years. Up to 11 million underwater mortgages will be affected. Neither our families, our neighborhoods, nor our state and national economies can bear a resumption of crisis on this order of magnitude.
I argue that ongoing and self-worsening slump in the primary and secondary mortgage markets is rooted in a host of recursive collective action challenges structurally akin to those that brought on the real estate bubble and bust themselves. Collective action problems of this sort require duly authorized collective agents for their solution. At present, the optimally situated such agents for purposes of mortgage market clearing are municipal governments exercising their traditional eminent domain authority.
I sketch a plan pursuant to which municipalities, in partnership with investors, can condemn underwater mortgage notes, pay mortgagees fair market value for the same, and systematically write down principal. Because in so doing they will be doing what parties themselves would do voluntarily were they not challenged by structural impediments to collective action, municipalities acting on this plan will be rendering all better off. They will also be leading the urgently necessary project of eliminating debt overhang nationwide and thereby at last ending our ongoing debt deflation.
Professor Hockett's idea was then promoted in the media by, among others, Prof. Robert J. Shiller (Yale--Economics & Finance), in the New York Times Piece Reviving Real Estate Requires Collective Action. As the title indicates, Schiller theorizes the mortgage crisis as in part a collective action problem that can be addressed by Hockett's proposal to use eminent domain to seize underwater mortgages.
But eminent domain law needn’t be restricted to real estate. It could be applied to mortgages as well. Governments could seize underwater mortgages, paying investors fair market value for them. This is common sense too. The true fair market value for these mortgages is arguably far below their face value, given the likelihood of default, with its attendant costs.
Professor Hockett argues that a government, whether federal, state or local, can start doing just this right now, using large databases of information about mortgage pools and homeowner credit scores. After a market analysis, it seizes the mortgages. Then it can pay them off at fair value, or a little over that, with money from new investors, issuing new mortgages with smaller balances to the homeowners.
Yesterday in The Atlantic Cities, Amanda Erickson published an excellent overview story about the proposal, Can Eminent Domain Solve our Mortgage Woes?. Of note to us are the comments by the eminent eminent domain expert (that's not a typo) Prof. Thomas Merrill (Columbia).
It's a clever idea. But is it legal? "It's very unusual," says Thomas W. Merrill, a law professor at Columbia University who specializes in property law. But, he notes, "this doesn't mean it's unconstitutional."
Before the landmark 2005 Kelo vs. New London decision, Merrill says, there's little doubt that the courts have upheld this kind of law. "Before Kelo, courts took a hands-off approach," Merrill says. In the 1984 case Hawaii Housing Authority vs. Midkiff, the Supreme Court ruled that the Hawaiian legislature could take a property controlled by landlords and sell it back to leasees. "Condemning a landlord's interest in property to transfer to a tenant is not too different," Merrill says.
But Kelo changed that. In that case, the Supreme Court ruled that cities could use eminent domain to transfer land from one private owner to another, and that doing so for economic development purposes constitutes a public use. "At this point, I guess you'd have to say all bets are off in terms of what is and isn't eminent domain," Merrill says.
And finally for now, Prof. Richard Epstein is critical of the idea. From More Nonsense on the Home Mortgage Front: Don't Let Municipal Governments Condemn Mortgages at Bargain Rates:
The idea has already been rightly panned by the Wall Street Journal. But the entire proposal needs still further consideration. First off, Hockett and his group insist that there is a huge collective action problem that prevents the rationalization of mortgage matters. And there is. It is called local government regulations that have blocked the foreclosure measures set out above. Handle those and the externalities to which they refer disappear. No longer do we have owners neglecting property or clogging the courts with endless motions.
Again, this post is just to give you some links to look at the arguments. From my perspective, these are some fascinating arguments that illuminate not only the mortgage crisis but also the general debate over eminent domain.
August 11, 2012 in Constitutional Law, Eminent Domain, Finance, Housing, Local Government, Mortgage Crisis, Mortgages, Politics, Property Theory, Real Estate Transactions, Scholarship, Takings | Permalink | Comments (1) | TrackBack (0)
Tuesday, May 29, 2012
Kermit Lind, a long-time clinician at Cleveland Marshall School of Law, has posted Collateral Matters: Housing Code Compliance in the Mortgage Crisis. Cleveland has been ground zero for foreclosure crisis response, especially as it concerns the impact of subprime lending practices on vacant and abandoned properties. Here's the abstract:
This article first describes the paradigm shift in mortgage loan servicing over the past two decades. Securitization of mortgages as commodities and exotic financing products changed the position and role of mortgage loan collateral. As new and unregulated mortgage servicing and debt collection practices were increasingly insulated from mortgage ownership, collateral as a securing factor became remote and overlooked by mortgagees. Meanwhile, the collateral matters greatly to those proximately affected by the neglect of its condition. Mortgagees, but not servicers, are listed in public records as the party holding the legal interest in the property while the mortgage industry deems the servicers to have complete control over the real property abandoned by owners. This change renders conventional housing code compliance procedures obsolete in the face of massive loan failures. The article then suggests that new strategic thinking is needed to redesign and retool code compliance processes. It offers some examples of changes that are needed. There is still imminent disaster for many homeowners, neighborhoods and communities from serious blight. Upgrading local code enforcement and being strategic in its application is essential in order to limit the damage resulting from the mortgage crisis.
Saturday, May 19, 2012
David J. Reiss (Brooklyn) has posted Reforming the Residential Mortgage-Backed Securities Market, forthcoming in Hamline Law Review (2012). The abstract:
This essay is a lightly-edited version of a talk given at the “Federal Housing Finance Policy, Secondary Mortgage Market Issues: Causes and Cures, Secondary Mortgage Market Reform” symposium at Hamline University School of Law. The issues that we are struggling with now are, in many ways, the equivalent of the issues that we struggled with during the Great Depression: what should housing policy look like and what decisions should be made in the next five years or so to bring us from crisis to stability? In all likelihood our answer to this question will define the housing market for generations. To help answer the question, this essay will proceed as follows. First, it will provide some context for American housing policy discussions. It will then outline three ethics that inform housing policy. The essay will then focus on one of the key issues that we face — what should happen with Fannie and Freddie as they exit conservatorship? It concludes by highlighting some of the other housing finance issues that must be addressed before we can move forward with a coherent plan of reform. These additional issues include, first, what is the future of the 30-year mortgage? Second, what is the fate of the lock-in, whereby a person could get a guaranteed interest rate prior to closing the loan? Third, what is the fate of the low-down-payment mortgage? Fourth, what is the appropriate role of the FHA in the context of the entire housing finance infrastructure, and in relationship to Fannie and Freddie in particular? And finally, how much will we allow the goal of increasing homeownership to impact the design of our housing finance system?
Tuesday, May 15, 2012
Paul Boudreaux (Stetson)--the original Founding Editor of the Land Use Prof Blog-- has published a book that addresses one of the most critical issues in American land use in the 21st century: The Housing Bias--Rethinking Land Use Laws for a Diverse New America (Palgrave MacMillan, 2011). Here's the SSRN abstract:
As more than 300 million Americans squeeze into our country, and as single-person households now outnumber families of parents and children, it's time to rethink our land use laws that favor the single-family house. Our zoning laws were created in an age that assumed that nearly everyone outside of central cities preferred to live a house separated from neighbors; this assumption is no longer valid and no longer sustainable for a crowded nation. The Housing Bias explores the legal discrimination against apartment buildings and other forms of low-cost residences and how these laws make housing more expensive for modest-income Americans – a key factor in the development of subprime loans and other risky practices that eventually sparked our current economic crisis. Why do our laws prohibit the construction of low-cost housing? It is largely because existing homeowners prefer to exclude them – an astonishing example of law’s granting a legal privilege to wealthier citizens, a privilege that our nation can no longer afford.
This provocative book explores real-world 21st-century controversies of the housing bias. It visits the recent effort of Virginia suburbs to enforce “overcrowding” laws against mostly Latino families who migrated to the area to build new subdivisions, and then moves to New York, where eminent domain is used through a dubious interpretation of law to seize condominiums of middle-class families to build a new pro basketball arena. The book reports on the story of how laws requiring large house lots prevented the construction of a mobile-home community in a growing rural county in southern Michigan, and then examines the failed effort to legalize the widespread phenomenon of small “granny flats” in the backyards of the middle-class homes in the packed city of Los Angeles.
The Housing Bias concludes by exploring how we could update our laws to accommodate the housing needs of a diverse new America, in which half of all households now consist of only one or two persons. The prescriptions range from the complex, such as using state laws to override the power of local homeowners to zone out low-cost housing in certain zones, to the simple, such as facilitating the construction of apartments above suburban malls. It is useful for libraries and for college courses on society or law or for any intelligent reader. Written in an entertaining and jargon-free style, The Housing Bias is essential reading for understanding the flaws and the future of the American community.
One of the great things about land use is that it is fundamentally about places and their stories, and in this book Paul uses these examples to make a larger point about a critical issue of law and policy. The Housing Bias is definitely worth reading and thinking about.
Thursday, April 5, 2012
On today's Morning Edition, NPR broadcast this story by WCPN on Cleveland's ramping up of demolition of vacant and abandoned properties. The piece features a sound bite from Jim Rokakis, the dynamic founder of Cleveland's new county-wide land bank, which is using part of the $75 million that Ohio Attorney General Mike DeWine has appropriated for vacant house demolition from the State's share of the $25 billion AG settlement with five major mortgage lenders. Rokakis wrote an op-ed in the Washington Post earlier this year urging national action on demolition funding.
As co-chair, with South Bend's new mayor, Pete Buttigieg, of the City's Vacant and Abandoned Property Task Force, I would have loved to see Indiana follow Ohio's lead, but last month the Legislature here decided to use its AG settlement money to resolve funding issues it was facing with the home energy assistance fund.
For those interested in the land use implications of responses to vacant and abandoned property issues, you may also want to check out the stories NPR has done on land banking and "blotting" (the creation of multi-parcel open spaces in dense urban neighborhoods). As always, the Center for Community Progress is a great general resource on all things vacant and abandoned.
Thursday, February 2, 2012
President Obama gave a speech yesterday in Falls Church, VA, explaining his State of the Union thoughts on housing. From the White House transcript:
As I indicated at the State of the Union last week, I am sending Congress a plan that will give every responsible homeowner in America the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates. (Applause.) No more red tape. No more runaround from the banks. And a small fee on the largest financial institutions will make sure it doesn’t add to our deficit.
I want to be clear: This plan, like the other actions we’ve taken, will not help the neighbors down the street who bought a house they couldn’t afford, and then walked away and left a foreclosed home behind. It’s not designed for those who’ve acted irresponsibly, but it can help those who’ve acted responsibly. It’s not going to help those who bought multiple homes just to speculate and flip the house and make a quick buck, but it can help those who’ve acted responsibly.
What this plan will do is help millions of responsible homeowners who make their payments on time but find themselves trapped under falling home values or wrapped up in red tape.
Monday, January 30, 2012
Walter Russell Mead (Bard College) has posted a fascinating essay at The American Interest called Beyond Blue Part One: The Crisis of the American Dream. An excerpt:
I’ve written in earlier posts about the shift from the first American Dream to the second: from the family farm to the suburban “homestead.” It was a profound change in American life and culture that has not yet been fully explored. The family farm integrated production and consumption, work and leisure, family and business. The family wasn’t just a union of sentiment: it was an element of production. Mom and Dad worked as a team to feed, house and clothe the family, and as the kids grew up they took on greater and greater responsibilities in the common effort. Their lives at home prepared them for the new lives they would lead on their own: the kids would grow up, marry, and start farms.
The 20th century suburban homestead was a very different place.
This is almost exactly the theme of an article I am writing, so naturally I find it interesting! Mead's essay ranges well beyond land use, but his grounding of the "American Dream" in patterns of living and social organization speaks to how incredibly relevant land use models are to the compelling issues facing American society in the 21st Century.
Monday, January 23, 2012
On Morning Edition today, NPR ran a story about farmers who sold land for development repurchasing it for agriculural use. Here's the summary:
Over the past half-century more than 20 million acres of U.S. farmland were transformed into housing developments. With new home construction all but stopped, farmers in many areas are buying or leasing land once slated for development and planting crops on it.
Wednesday, December 14, 2011
Ioan Voicu (US Gov't--Office of the Comptroller of the Currency), Vicki Been (NYU), Mary Weselcouch (NYU Furman Center), and Andrew Tschirart (US Gov't--OCC) have posted Performance of HAMP versus non-HAMP Loan Modifications--Evidence from New York City. The abstract:
Policymakers have heralded mortgage modifications as a key to addressing the ongoing foreclosure crisis. However, there is a lack of research about whether modifications are successful at helping borrowers stay current on their loans over the long run and what kinds of modifications are most successful. Our empirical strategy employs logit models in a hazard framework to explain how loan, borrower, property, servicer and neighborhood characteristics, along with differences in the types of modifications, affect the likelihood of redefault. The dataset includes both HAMP modifications and proprietary modifications. Our results demonstrate that borrowers who receive HAMP modifications have been considerably more successful in staying current than those receiving non-HAMP modifications.
Thursday, December 8, 2011
Elizabeth Renuart (Albany) has posted Property Title Trouble in Non-Judicial Foreclosure States: The Ibanez Time Bomb? It's the first piece that I've come across to explore the title law ramifications of the Mass. Supreme Judicial Court's Ibañez decision that I alluded to in a post earlier this year. Hat tip to my colleague, Judy Fox, for sharing it with me. Here's the abstract:
The economic crisis gripping the United States began when large numbers of homeowners defaulted on poorly underwritten subprime mortgage loans. Demand from Wall Street seduced mortgage lenders, brokers, and other players to churn out mortgage loans in extraordinary numbers. Securitization, the process of utilizing mortgage loans to back investment instruments, not only fanned the fire; the parties to these deals often handled and transferred the legally important documents that secure the resulting investments — the loan notes and mortgages — in a careless manner.
The consequences of this behavior are now becoming evident. All over the country, courts are scrutinizing whether the parties initiating foreclosures against homeowners legally possess the authority to repossess those homes. When the authority is absent, foreclosure sales may be reversed. The concern about authority to foreclose is most acute in the majority of states where foreclosures occur with little or no judicial oversight before the sale, such as Massachusetts. Due to the decision in U.S. Bank N.A. v. Ibanez, in which the Supreme Judicial Court voided two foreclosure sales where the foreclosing parties did not hold the mortgage, Massachusetts is the focal jurisdiction where an important conflict is unfolding.
This article explores the extent to which the Ibanez ruling may have traction in other nonjudicial foreclosure states and the likelihood that clear title to foreclosed properties is jeopardized by shoddy handling of notes and mortgages. I focused on Arizona, California, Georgia, and Nevada because they permit nonjudicial foreclosures and they are experiencing high seriously delinquent foreclosure rates. After comparing the law in these states to that of Massachusetts, I conclude that Ibanez should be persuasive authority in the four nonjudicial foreclosure states highlighted herein. However, property title trouble resulting from defective foreclosures may be more limited in Arizona and Nevada. The article also provides a roadmap for others to assess the extent to which title to properties purchased at foreclosure sales or from lenders’ REO inventories might be defective in other states. Finally, the article addresses the potential consequences of reversing foreclosure sales and responds to the securitization industry’s worry about homeowners getting free houses.
Monday, December 5, 2011
I came across a link to this Bloomberg report in reading for my previous post on the Leinberger-Kotkin debate. The article is a few months old, but I still think it's highly relevant: U.S. Moves Toward Home 'Rentership Society,' Morgan Stanley Says, discussing a report on housing.
The U.S. homeownership rate has fallen below 60 percent when delinquent borrowers are excluded, a sign of the country’s move toward a “rentership society,”Morgan Stanley said in a report today. . . .
The homeownership rate reached an all-time high of 69.2 percent in 2004 as relaxed lending standards fueled home sales and President George W. Bush promoted an “ownership society.” Mortgage delinquencies, foreclosures and tighter credit for housing loans are reducing property buying, [Morgan Stanley analysi Oliver] Chang said.
“Taken together they are forcibly moving the country away from being an ownership society,” Chang, based in San Francisco, said in an e-mail. “This change is only beginning, and is moving the country towards becoming a rentership society.”
A real estate professional demurs, but look at the reason why:
Most Americans still aspire to own their houses and don’t want to be renters forever, said Rick Davidson, president and chief executive officer of Century 21 Real Estate LLC in Parsippany, New Jersey.
“It isn’t about the financial aspects, but about building a family and having a part of the American dream,” Davidson, whose company is a unit of Realogy Corp., said today during an interview at Bloomberg’s offices in New York. “What really drives purchases at the end of the day is emotional and has to do with lifestyle.”
We're still conditioned to think of homeownership as the sine qua non of the American Dream--but it's not necessarily in our financial or economic interest; it's emotional and about lifestyle. But is there an adequate range of opportunities presented for Americans to choose (emotionally?) between different forms of lifestyle? I believe that at their base, issues of housing, community, and urban form are primarily cultural.
Wednesday, November 16, 2011
Frank Alexander (Emory) and Leslie Powell have posted Neighborhood Stabilization Strategies for Vacant and Abandoned Properties, 34-8 Zoning and Planning Law Report 1 (2011). Here's the abstract:
Vacant and abandoned properties are a growing inventory in many American neighborhoods as a result of unusually high foreclosure numbers, population loss, and property value declines. The impact of vacant and abandoned properties is tangible and requires a willingness by local governments to acknowledge and address the problem. This article outlines the problems caused by vacant and abandoned properties and suggests a variety of potential strategies, from property tax foreclosure reform to land banking.
Frank has co-founded along with Dan Kildee the Center for Community Progress (f/k/a The National Vacant Properties Campaign). His scholarly and consulting work with affordable housing, title-clearing and land bank present a model of engaged scholarship that should inspire all law teachers as Frank himself does for those who have the pleasure to meet him.
Monday, October 31, 2011
Earlier in the year, I blogged about a decision (Ibañez) by the Massachusetts Supreme Judicial Court finding as invalid a land title claimed by a foreclosing bank that could not show that it held the mortgage at the time of foreclosure. Prior to that ruling, a stated practitioners' standard recognized as curative post-foreclosure assignments of mortgages. The Bevilacqua v. Rodriquez case presented the Court (previously blogged about here) with similarly sloppy handling of the mortgage assignments but also a third-party purchaser (and redeveloper) of the property from the foreclosing bank.
Earlier this month, the Mass. SJC again found that the foreclosing bank had no title to transfer and that the title claimant's more sympathetic position with regard to the botched securitization process did not create title. The Court dismissed his "try title" action and suggested that his equitable rights to the (as yet unforeclosed) mortgage might support a possible reforeclosure--a less than reassuring directive if the purchaser has invested in the property more than the lien value of the mortgage.
Thursday, October 13, 2011
Sewin Chan (NYU Wagner School), Claudia Sharygin (NYU Furman Center), Vicki Been (NYU Law), and Andrew Haughwout (Federal Reserve Bank--NY) have posted Pathways after Default: What Happens to Distressed Mortgage Borrowers and Their Homes? The abstract:
We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default – from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with whether a borrower behind on mortgage payments receives a legal notice of foreclosure, and with what ultimately happens to the borrower and property. In particular, we focus on a borrower’s ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: the terms of the loan; the borrower’s credit history; current loan-to-value and the presence of a junior lien; the borrower’s post-default payment behavior; the borrower’s participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower’s race and ethnicity.