Monday, March 12, 2018
John D. Morley, Professor of Law, Yale Law School
Robert H. Sitkoff, John L. Gray Professor of Law, Harvard Law School
David English, University of Missouri
Across the centuries, the law of trusts evolved on the assumption that full power to administer a trust would belong to a trustee. A directed trust departs from this tradition by granting a power over a trust to a person who is not a trustee. The fundamental policy question arising from the emergence of directed trusts is how the law of trusteeship should be divided among a directed trustee and trust director. The Uniform Law Commission has just finished work on the Uniform Directed Trust Act (UDTA), which provides clear, practical, and comprehensive solutions to all of the major legal difficulties in a directed trust. At the same time, the UDTA offers a host of technical innovations that dramatically improve on existing directed trust statutes, and that point to a variety of drafting practices for directed trusts that could be improved in all states. In this session, Professors Robert Sitkoff (Harvard) and John Morley (Yale), respectively the Chair and the Reporter for the UDTA drafting committee, will discuss the UDTA and what it means for directed trust practice.
Register now for this FREE program and join us every second Tuesday of each month for a discussion of these and other current issues. (The content of this program does not meet requirements for continuing legal education (CLE) accreditation. You will not receive CLE credit for this program).
Friday, March 9, 2018
Exactions are demands levied on residential or commercial developers to force them, rather than a municipality, to bear the costs of new infrastructure. Local governments commonly use them to address the burdens that growth places on schools, transportation, water, and sewers. But exactions almost never address energy needs, even though local land use decisions can create significant externalities for the power grid and for energy resources.
This Article proposes a novel reform to land use and energy law: “energy exactions”—understood as local fees or timing limits aimed at addressing the energy impacts of new residential or commercial development. Energy exactions would force developers to internalize the costs of growth on the energy grid, generate important information about community energy needs and their externalities, decentralize risk taking, promote technological change in new sources of power supply, and stimulate useful forms of regulatory competition between local communities and state utility regulators. In the process, they would induce energy conservation in the development of new residential and commercial buildings.
The Article defends the implementation of energy exactions by local governments. It then analyzes the potential legal hurdles energy exactions face, including their authorization, preemption by state utility laws, and implications under the Takings Clause of the U.S. Constitution. Energy exactions provide local governments a unique, pragmatic and valuable tool to integrate community values into energy grid planning, promote demand reduction, and enable new investments in low-carbon energy infrastructure.
Tuesday, March 6, 2018
Shelley Ross Saxer (Pepperdine) and Jonathan Rosenbloom (Drake) just finished a book titled Social-Ecological Resilience and Sustainability (Aspen Coursebook Series). Great work to these two! Check it out below:
Social-Ecological Resilience and Sustainability by Shelley Ross Saxer and Jonathan Rosenbloom is designed to help students understand and address new, changing, and complex economic, environmental, and social systems. This book introduces resilience and sustainability as analytical frameworks and illustrates how these concepts apply in various contexts: water, food, shelter/land use, energy, natural resources, pollution, disaster law, and climate change. The first two chapters (Part I) provide students with a conceptual foundation to explore the interdisciplinary nature of resilience and sustainability and the meanings of, complexities embedded in, and the overlap and differences between these frameworks. Each of the remaining eight chapters (Part II) views resilience and sustainability in a specific law and policy context. Strategically placed throughout Part II, the authors describe eight useful tools — “Strategies to Facilitate Implementation”—to help identify, assess, integrate, or utilize resilience and sustainability as analytical frameworks.
- A two-part approach that first provides students with a conceptual foundation and then allows students to view resilience and sustainability in eight law and policy contexts (described above)
- Numerous graphics throughout to illustrate concepts, depict events described, and otherwise enliven the content
- Case studies that examine human decisions that led to unsustainable and non-resilient systems and societies
- New and innovative ways to explain complex systems and in turn rethink traditional notions of law and policy
Wednesday, February 28, 2018
Call for Papers
The Monash University Centre for Commercial Law and Regulatory Studies, and the Castan Centre for Human Rights Law, are hosting a conference on Property Rights and Human Rights: New Possibilities in an Age of Inequality on August 9-10, 2018.
The debate on property rights and human rights has renewed relevance as a result of global inequality, mass movements of people, and modern forms of slavery. While the underlying issue remains tensions between the distributional consequences of property and property as a source of freedom from interference, the context has shifted from protection against arbitrary state takings to the emancipatory possibilities (and limitations) of property for people often excluded by the state, including refugees and the internally displaced, ethnic minorities and indigenous peoples, victims of human trafficking, farmers and forest-dwellers, and households subject to disability or extreme poverty.
Recent scholarly responses to the new contexts of property have moved from libertarian conceptions, which focus on safeguards against the state, to progressive accounts that incorporate social obligations, and respect for interpersonal relationships, into the definition of property itself. A common thread for progressive accounts is the re-emergence of natural law conceptions, which bypass the state as a source of real or intellectual property rights, and re-configure property to enhance compatibility with human rights, including international human rights law. However, residual issues remain as to competing “essentialist” perspectives on property law, including the status of private rights to exclude, and the role of the state as a source of freehold or monopoly rights. This conference explores the new possibilities of property rights and human rights in an age of inequality with reference to the following topics:
- Property and distributive justice.
- Property, sovereignty and poverty.
- Property and human trafficking.
- Property, disability and discrimination.
- Property and indigeneity.
- Land grabs and international human rights law.
Confirmed speakers include
- Gregory Alexander, A. Robert Noll Professor of Law, Cornell University;
- Robin Paul Malloy, E.I. White Chair and Distinguished Professor of Law, Syracuse University; and
- Hanoch Dagan, Stewart and Judy Colton Professor of Legal Theory and Innovation, Tel-Aviv University.
Important Dates and Details
Deadline for Abstracts: 20 March 2018
Submit abstract here.
Announcement of Accepted Abstracts: 30 March 2018
Deadline for Full Text Papers: 15 July 2018
Dates of Conference: 9-10 August 2018
Refer to the conference website for more information and to register for the conference
- Early registration $200 AUD (closes30 March 2018.)
- Full registration rate $250AUD (closes 15th July, 2018)
- Students (JD, PhD, SJD or other program) is $80AUD (closes 15th July, 2018).
Tuesday, February 27, 2018
The non-enforcement of existing property laws is not logically separable from the issue of unfair and unjust state deprivations of property rights at which the Constitution’s Takings Clause takes aim. This Article suggests, therefore, that takings law should police allocations resulting from non-enforcement decisions on the same “fairness and justice” grounds that it polices allocations resulting from decisions to enact and enforce new regulations. Rejecting the extant majority position that state decisions not to enforce existing property laws are categorically immune from takings liability is not to advocate that persons impacted by such decisions should be automatically or even regularly entitled to the Takings Clause’s constitutional remedy. Rather, it simply suggests that courts should resist the temptation to formulaically and categorically prohibit non-enforcement takings claims in favor of assessing those claims on the merits.
Saturday, February 10, 2018
There's a new book out by Hart Publishing and edited by Amy Goymour, Stephen Watterson, and Martin Dixon titled New Perspectives on Land Registration. Judging from the table of contents, the work looks like quite a fascinating read--particularly for those interested in the role that information and registration play in the allocation of property rights. Here's a short summary of the title:
The Land Registration Act 2002 has been in force for almost fifteen years. When enacted, the legislation, which replaced the Land Registration Act 1925, was intended to offer a clear and lasting framework for the registration of title to land in England and Wales. However, perhaps confounding the hopes of its drafters, the legislation's interpretation and application has since generated many unanticipated problems which demand attention.
In this book's twenty chapters, leading land law scholars, Law Commissioners past and present, judges, and Registry lawyers unpick key technical controversies, and expose underlying theoretical and policy concerns. Core issues addressed in these chapters include: the legitimate ambitions of registration regimes; the nature and security of title afforded by registration; the resolution of priority disputes affecting registered titles; the relationship between the general law and the registration regime; and new challenges presented by modern technological developments.
And here's the table of contents:
PART I: FOUR PERSPECTIVES ON MODERN LAND REGISTRATION SYSTEMS
A (Former) Law Reformer's Perspective: Reforming the LRA 2002-Catalysts and Questions
2. The Land Registry's Perspective: The Practical Challenges of Land Registration
John Pownall and Richard Hill
3. The Land Registration Jurisdiction: An Analysis of the First Twelve Years
4. A Broader Development Perspective: Economic and Political Drivers of Worldwide Land Registration Reform
PART II: CONTEMPORARY PROBLEMS AND SOLUTIONS
A. THE NATURE OF REGISTERED TITLE
5. Adverse Possession Under the LRA 2002
6. The Continuing Relevance of Relativity of Title Under the Land Registration Act 2002
Amy Goymour and Robin Hickey
B. ALTERATION AND INDEMNITY
7. Guaranteed Title: No Title, Guaranteed
8. Can Rectification be Retrospective?
9. Assessing Rectifi cation and Indemnity: After Gold Harp and Swift 1st
10. De-throning King Midas: The New Law of Land Registration in Scotland
Kenneth GC Reid
11. Lack of Proper Care
12. Reforming the Indemnity Scheme
C. PRIORITIES BETWEEN COMPETING INTERESTS
13. Priority Contests Involving Registered Titles
14. Subrogation, Priority Disputes and Rectification: Mapping a Route Through the Thicket
D. THE LAND REGISTRATION REGIME AND THE GENERAL LAW
15. A Tale of Three Promises: Setting the Scene
Stephen Watterson and Amy Goymour
16. A Tale of Three Promises: (1) The Title Promise
Stephen Watterson and Amy Goymour
17. A Tale of Three Promises: (2) The Priority Promise
Stephen Watterson and Amy Goymour
18. A Tale of Three Promises: (3) The Empowerment Promise
Stephen Watterson and Amy Goymour
E. THE MECHANICAL CHALLENGES OF LAND REGISTRATION IN A MODERN SOCIETY
19. Lessons from Scottish Land Registration Reform: Changes Under the Bonnet
20. Automating State Guarantee of Title Systems: System Design and Possible Outcomes-Australasian Thoughts
Rod Thomas, Rouhshi Low and Lynden Griggs
Monday, February 5, 2018
Millennials are losing interest in ownership. They prefer to access property when needed on a casual, short-term basis. Prompted by the sharing economy, online platforms, and ethical consumerism, access presents a radical alternative to established property forms. This type of property use is popular among younger, technology-savvy generations. It prioritizes use, flexibility, and mobility over the control, stability, and attachment that is associated with traditional property forms. Despite its recent prominence, access has remained surprisingly undertheorized, especially from a property perspective. This Article fleshes out the normative values and the concerns ingrained in this emerging property form. In addition, it critically evaluates the legal and regulatory response to access. It argues that the law continues to steer users towards ownership or other forms of long-term possession, significantly limiting the option of access. Accordingly, it calls for reevaluating insurance, tax, zoning, and anti-discrimination laws.
Sunday, February 4, 2018
NYU Furman Center (New York, NY)
LEGAL RESEARCH FELLOW
The Furman Center for Real Estate and Urban Policy at New York University invites applications for a post-graduate legal fellowship. The Furman Center, jointly housed at NYU’s School of Law and its Wagner Graduate School of Public Service, is a leading academic research center devoted to the public policy aspects of land use, real estate development, and housing. The Furman Center’s law fellowships are designed for promising legal scholars with a strong interest in housing, local government, real estate, or land use law. The Fellow’s time is shared equally between independent research on topics of his or her choice in preparation to enter the academic job market, and Furman Center research projects, conducted jointly with faculty members, graduate students, and staff. In recent years, legal fellows have worked on projects addressing the legal impediments to the development of micro and accessory dwelling units in New York and other cities; an empirical and legal analysis of the use of transferable development rights in New York City; the economics and legal issues surrounding mandatory inclusionary zoning; and a number of projects addressing fair housing requirements. The Law Fellow is invited to participate in faculty workshops, colloquia, and other scholarly forums at the NYU School of Law. This two-year fellowship typically begins summer/fall. The position comes with a salary and a generous array of benefits, which include medical, dental and vision. Further information regarding benefits can be found here: http://www.nyu.edu/employees/benefit/full-time/Professional-Research-Staff-Code-103.html. Note that this position is considered a Research Scholar at NYU School of Law.
Qualifications: A J.D. degree, superior academic achievement, excellent writing skills, initiative, and a demonstrated interest in and commitment to scholarship are required.
Applicants should submit a cover letter, curriculum vitae, scholarly writing sample, law school transcripts (unofficial copies are acceptable), and the names and contact information of 3 references. Send application materials and questions to email@example.com. Please include “Legal Research Fellowship” in the subject line. Applications will be given consideration until the position is filled. Review of applications will begin immediately and will be evaluated on a rolling basis. Only candidates of interest will be contacted.
EOE/AA/Minorities/Females/Vet/Disabled/Sexual Orientation/Gender Identity.
NYU Furman Center (New York, NY)
The Policy Director leads the effort to link the NYU Furman Center’s research with policy-relevant issues, ongoing public debates, and key stakeholders. He or she also serves as a key point of contact for policymakers and other stakeholders who rely on the Center’s work. The Policy Director serves as a member of the NYU Furman Center’s leadership team.
Research Development and Management
- Identify and monitor pressing policy discussions and debates--in New York City and nationally--to help shape the NYU Furman Center’s research agenda on affordable housing and urban policy issues.
- Write and edit NYU Furman Center reports, briefs, presentations, talking points, and other products focused on policy analysis and reform.
- Translate academic research--including the Center’s legal, data, and quantitative analysis--into materials accessible for non-academic audiences.
- Serve as project manager for select research and policy projects.
- Supervise and mentor policy staff and/or graduate student research assistants focused on the Center’s policy projects.
- Help to elevate the profile of the NYU Furman Center as a leader in the housing policy field.
- Build and maintain relationships with public officials, private-sector stakeholders, and community groups, and solicit feedback to inform future research and policy work.
- Oversee the planning and execution of the Center’s key events, including policy breakfasts, webinar briefings, symposia, and roundtables.
- Represent the NYU Furman Center as a public-facing spokesperson for panels, presentations, and in the media.
- Participate in the development of research proposals and fundraising strategy in coordination with Directors.
Qualifications: A J.D., master’s degree in Public Policy/Administration, or an advanced degree in an equivalent field. Minimum of five years of relevant experience preferred, including management experience and a concentration in at least one of the following areas: urban policy, affordable housing, land use, or real estate. Strong writing and communication skills and ability to present quantitative findings are required. The candidate should also have strong organizational, analytical, and project-management abilities; and be comfortable working on a team. Knowledge of federal, state, and municipal housing programs or land use strongly preferred.
The position comes with a salary and a generous array of benefits, which include medical, dental, and vision. Further information regarding benefits can be found here: http://www.nyu.edu/employees/benefit/full-time/Professional-Research-Staff-Code-103.html.
To Apply: Applicants should submit a cover letter, resume, writing sample, law/grad school transcripts (unofficial copies are acceptable), and list of 3 references. Send application materials and questions to firstname.lastname@example.org. Please include “Policy Director Position” in the subject line. Review of applications will begin immediately. Only candidates of interest will be contacted.
EOE/AA/Minorities/Females/Vet/Disabled/Sexual Orientation/Gender Identity.
Wednesday, January 31, 2018
Planned unit developments, also called planned communities, are a major development type. Originally cluster housing projects with common open space, they can be planned today as infill in downtown areas or as a major master-planned community. They require discretionary review, are often dominant in the zoning process, and present a challenge to the zoning system. A threshold question is how municipalities should zone for planned unit developments, and this Article discusses conditional use, base zone, and rezoning alternatives.
This Article next discusses the zoning review process for these developments, which must operate fairly and produce acceptable decisions. Alternatives that can avoid or supplement discretionary review are considered next, and this Article concludes with a discussion of affordable housing as a social responsibility.
Tuesday, January 30, 2018
The flagship event of the Program in Real Estate and Community Development Law at Texas A&M University School of Law, the Real Property Law Schmooze, is an annual event which affords property law scholars the opportunity to share works-in-progress or early-stage ideas with other leading property law scholars at Texas A&M University and beyond. Last year, the Program’s inaugural year, the Program invited 22 external legal scholars from law schools in the southern United States to the 2017 Schmooze.
The 2018 “Bridging the Urban Versus Rural Divide” Real Property Law Schmoozeinvites 17 legal scholars with expertise in either urban or rural property law to present unpublished works-in-progress or early-stage ideas that are relevant to the theme of how law can help resolve urban and rural challenges and bridge the urban versus rural divide. We welcome papers on a broad range of urban and rural property law challenges including, but not limited to, housing law and policy, land tenure, land loss, land use, zoning, the environment, and property law and theory, as well as papers that address international and comparative urban and rural property law issues. Vie
Notably, our Program in Real Estate and Community Development Law is coordinating with Texas A&M University School of Law’s Faculty Speaker Series to host two great property scholars who are also participating in the Schmooze:
Professor Joseph William Singer, the Bussey Professor of Law at Harvard Law School, will be the Distinguished Real Property Law Keynote Speaker on Friday, February 2, 2018. He will present "Things Invisible to See: State Action and Private Property." This Faculty Speaker Series talk will be open to the entire law school, whereas the Schmooze is an invitation-only workshop.
Professor Bernadette Atuahene of IIT-Chicago Kent College of Law will present to the Texas A&M Law Faculty at the Faculty Speaker Series on Thursday, February 1, in addition to speaking on "Taxed Out: Illegal Property Tax Assessments and the Epidemic of Tax Foreclosures in Detroit" at the Schmooze on Saturday, February 3, 2018.
Click here for the full schedule. Looks like a superb event again this year!
Wednesday, January 24, 2018
Get ready to pack your light summer jackets: the annual Association of Property, Law, and Society (ALPS) conference heads to Maastricht this summer! The 9th annual ALPS meeting at Maastricht University, The Netherlands on May 31-June 2, 2018. Average June temperature for Maastricht: 61 degrees Fahrenheit (16 degrees Celsius). Personally, this will be a welcome change from the New Orleans heat wave that begins to hit around that time.
The call for papers for ALPS is open. Abstracts of 250 words should be emailed to alps2018 at maastrichtuniversity.nl. The deadline for submitting papers and panels is February 28, 2018 but registration for the conference will continue to be available after that date. Authors and panel proposers will be notified of the acceptance of their individual submissions or proposed panel on a rolling basis and, in all cases, by no later than March 9, 2018. For more information on the ALPS conference, please visit https://www.maastrichtuniversity.nl/events/association-law-property-society-9th-annual-meeting.
As luck would have it, if you are flying to Europe for ALPS this summer, there are not one, but two other property law conferences you can attend. Three property law conferences for the price of one international plane ticket. This is a deal too good to pass up!
First, the Cambridge Centre for Property Law is hosting a conference on May 25 and May 26. The conference will bring together property law scholars and practitioners from around the world to discuss important contemporary issues facing the law of real property. A number of great property law scholars are slotted to be at the Cambridge Centre for Property Law conference including, but not limited to, Greg Alexander (Cornell), Ken Reid (Edinburgh), Nicholas Hopkins (Law Commission), Sue Bright (Oxford), Sjef van Erp (Maastricht), Tim Mulvaney (Texas A&M), John Lovett (Loyola), and many, many, many more! To book a spot at the conference, go to http://onlinesales.admin.cam.ac.uk/conferences-and-events/land-economy/regulatory-issues-in-real-property-law/regulatory-issues-in-real-property-law-2018. If you have any questions about the conference, please contact Douglas Maxwell at dskm2 at cam.ac.uk.
Second, the 9th edition of the Young Property Lawyers Forum (YPLF) - which is a global network of young property lawyers - co-founded by Dr. Jill Robbie (Glasgow) and Dr. Bram Akkermans (Maastricht) will be held in Maastricht on Monday, May 28 and Tuesday, May 29. The YPLF is a conference especially for young researchers (those working on a PhD or within five years of finishing a PhD) and where more senior property law scholars attend, comment and actively participate, but do not present themselves. If you are a junior researcher in property law and would like to participate in the YPLF 2018 conference, please send an abstract of no more than 300 words to the organisers at yplf at yplf.net by February 28, 2018.
Tuesday, January 23, 2018
John Lovett (Loyola-NOLA) has recently posted a number of interesting pieces on SSRN. Check them out below:
Into Centuries of Centuries: Reflections on Marc R. Poirier (1952-2015) (Journal of Law, Property, & Soc’y):
This essay reflects on the contributions to property law scholarship and teaching made by Marc R. Poirier (1952-2015), Professor of Law at Seton Hall School, over the course of his twenty-five year career in the legal academy. Marc Poirier was a distinguished scholar and great friend to many in the property law world. The essay recounts Poirier’s formative experiences as a student at Harvard Law School and in practice in Washington, D.C. It details his teaching innovations and his many institutional contributions to Seton Hall and the wider legal academy. It also provides a brief overview of Poirier’s remarkable range of scholarship on property law, emphasizing his syncretic, inter-disciplinary approach to property law and theory, environmental law and law dealing with gender identity and human rights. It draws attention to Poirier’s iterative, generous, and, above all, caring approach to scholarship, teaching and life.
Disseisin, Doubt, and Debate: Adverse Possession Scholarship in the United States (1881-1986) (Texas A&M Law Review):
This article addresses how U.S. and occasionally English property scholars discussed, analyzed and understood the doctrine of adverse possession between 1881 and the early 1980s. It fills a gap in current American property law scholarship by taking a deep, historiographic approach to a century of American adverse possession discourse, beginning with the ruminations of Oliver Wendell Holmes on possession in The Common Law (1881) and culminating in the famous tournament of scholars featuring R.H. Helmholz and Roger Cunningham (1983-86).
The article identifies and analyzes several major themes that emerge throughout this long century of adverse possession discourse. Those include: (1) constant debate over the fundamental doctrinal nature of adverse possession; (2) frequent attempts to distill the social, economic and systemic purposes served by the doctrine; (3) preoccupation with the Americanization of the English common law of adverse possession, and (4) attentiveness to incremental developments in U.S. courts and modest attempts to influence that development, occasionally interrupted by more radical prescriptive and theoretical critiques.
The article demonstrates that American adverse possession scholarship during this period was generally endogenous, apparently uninterested, with a few notable exceptions, in any social, economic or market factors occurring outside the academy or the narrow confines of adverse possession case law. This article recovers for contemporary lawyers, judges and property scholars the impressive learning and frequently brilliant insights that scholars such as Henry Ballantine, Percy Bordwell, William Walsh, William Stoebuck and Charles Callahan provided in their work — insights, which in many instances, foreshadowed scholarly innovations that appeared in subsequent decades.
As many dramatic recent flooding events illustrate, the risks posed by global climate change continue to mount. Rather than attempt to prove a causal connection between any of these tragic events and climate change, this article focuses on what many scholars and public policy advocates now realize is an inevitable response: retreat — especially moving households and entire communities to higher ground.
This article answers four interrelated questions that relate to the challenge of protecting or relocating communities threatened by sea-level rise and climate change in the specific context of takings claims and government land acquisition programs. These questions are visualized as forming a chronological decision tree which government officials, legislators and, inevitably, courts will face.
First, the article addresses whether property owners can assert a valid takings claim based on a governmental decision not to build hard infrastructure that would protect land, homes and businesses from sea-level rise and flooding? The article’s answer is no; takings liability does not exist in this situation. Next, the article asks whether governmental actors — federal, state or local — are likely to use the power of eminent domain to relocate property owners and entire communities to higher ground? Again, the answer is no; the political unpopularity of eminent domain will usually take this option off the table.
If governments do not use eminent domain to relocate communities but do want to use public resources to create voluntary property acquisition programs designed to facilitate the movement of households and, indeed communities, to higher ground, what strategies have proved to be most successful? To answer this question, the article reviews a handful of recent experiments and distills several lessons from this experience.
Finally, the article tackles a residual question that follows from the previous three. If a government sponsored buy-out program succeeds in inspiring a large percentage of property owners in a community to sell their property and actually move to higher ground (or if large numbers of property owners leave on their own volition for other reasons), what obligations, if any, does the government still owe to those who remain behind, especially when it comes to maintaining infrastructure and government services? Would a county, a state, the federal government, or even a public utility be able to withdraw infrastructure support and services and leave the remainder of the community to fend for itself in the face of ever-rising waters and more ferocious storms? To answer this question the article describes several recent cases and scholarly claims that purport to open the door to potential “passive takings” liability for governmental inaction in these circumstances. The article concludes by noting the irony that although governments generally do not face liability for failing to build hard infrastructure to protect communities from the risks of climate change at the outset, if their relocation and buy-out programs partially — but not entirely — succeed, they might face takings liability at the end of the day.
Tacking in a Mixed Jurisdiction (Andrew Steven ed., Avizandum 2017):
This book chapter addresses a key moment in the development of Louisiana’s law of acquisitive prescription. For one hundred and forty years, Louisiana courts had held that a possessor in bad faith could cumulate her possession with that of a prior possessor in good faith for purposes of establishing ten year acquisitive prescription regardless of whether the two possessions were linked by particular or universal succession. In Bartlett v. Calhoun, 412 So.2d 597 (La. 1982), the Louisiana Supreme Court reversed course and held that a subsequent possessor who acquires her possession by particular title must have all the statutory characteristics and conditions required for ten year acquisitive prescription. In other words, a bad faith possessor cannot tack her possession to the good faith possession of a prior possessor for purposes of achieving ten year acquisitive prescription if the subsequent possessor acquires possession by particular title.
This book chapter analyzes the doctrinal background preceding the decision in Bartlett, comments on the significance of the decision, reveals the dispute’s surprising final outcome, and responds to the decision’s critics, arguing that the alleged doctrinal asymmetry produced by the decision has not troubled subsequent Louisiana courts and explaining why the decision has acquired its own canonical weight in Louisiana property law. The book chapter concludes by providing a brief comparative excursion into Scots law of positive prescription, demonstrating that Scots law would solve the factual problem presented in Bartlett by focusing judicial inquiry on questions related to the authenticity of an allegedly forged deed rather than the good faith of a second possessor.
Monday, January 8, 2018
Sunday, December 31, 2017
Happy New Year, friends of the blog! Our wish for you next year (to quote the wise words of Steve Clowney) is that "all of your half-baked ideas turn into masterpieces, all of your committee work gets postponed, and all of your students write above average exams." Thanks for a great year and see you in 2018!
Saturday, December 23, 2017
All right, let me get this out of the way first thing: I’m a Patriots fan. Have been since 1993, when the era of “Patsies” ineptitude was a more salient association with the team than the current Brady/Belichick “Evil Empire” narrative.
That said, I am going to make the case that whatever my personal biases may be, as an objective matter the officials made the right call to reverse Pittsburgh tight end Jesse James’ (non-)catch in last Sunday’s game between the Pats and the Steelers, and even that the highly controversial “survive the ground” rule is good and should remain.
Begin with a very simple analogy to property law: Not all physical control over a thing evidences legal ownership. There are lots of easy examples: If you toss your keys to a valet, she doesn’t own your vehicle as soon as she catches them. (Also, why are you tossing your keys to a valet? Are you pretending to be in a Mentos commercial?) And if you let your friend stay in your house when you’re on vacation, he doesn’t take title as soon as he sets foot inside. They may say “possession is nine-tenths of the law,” but they also say things like “Alabamians will always prefer a child molester to a Democrat.” They happen to be wrong a lot of the time.
So to return to the topic at hand (thankfully), the point is that not every instance of physical control of the football results in a player’s possession of it. If a wideout makes a brilliant sideline catch but has one foot on the sideline, he doesn’t get possession. And for our purposes, if a tight end catches the ball briefly while falling to the ground, and then bobbles the ball on the way to the ground only to have the turf knock it loose entirely, that is not possession and it never was.
The NFL rule is clear on this:
“A player is considered to be going to the ground if he does not remain upright long enough to demonstrate that he is clearly a runner. If a player goes to the ground in the act of catching a pass (with or without contact by an opponent), he must maintain control of the ball until after his initial contact with the ground, whether in the field of play or the end zone. If he loses control of the ball, and the ball touches the ground before he regains control, the pass is incomplete. If he regains control prior to the ball touching the ground, the pass is complete.”
And for what it’s worth, this is also something that most NFL fans understand instinctively. I’ve very often seen players on my team and the opposing team snare the ball mid-air, but then lose it upon colliding with the ground, and my immediate reaction is that it’s not a catch. So the “survive the ground” rule is not some obscure technicality, it’s one I (and, I think, most observers of the game) uncontroversially understand to be true in most instances.
So why was invalidating James’ catch even controversial? Well, partly because it was called a catch and then reversed; this always makes it seem like the refs are vacillating and that the outcome is debatable, though it really shouldn’t. Calls are hard to make in an instant, and refs don’t have a perfect perspective. Video gives them a chance to get calls right, and that is way better than the previous world in which we were all stuck with terrible calls that were shown on video to be clearly wrong.
What seems to have most people confused, though, is that while he was going to ground, James broke the plane of the goal line with the ball. And it is true that in most cases, breaking the plane of the goal line means you’ve scored a touchdown, regardless of what happens after. So in this case many people’s instinctive reaction was that the play should have been dead the moment James thrust the pigskin over the goal line. This is a reasonable reaction.
Reasonable, but wrong. Breaking the plane of the goal line with the ball means you score a TD and the play is over only if you had legal possession of the ball at the time you broke the plane. Otherwise, it’s meaningless. So in James’ case, it’s actually a very easy application of the NFL rule: he bobbled the ball and lost it upon impact with the ground, so he did not complete the catch, so he never had legal possession, so his crossing the plane with the ball was irrelevant. Like the horseman Post in the famous fox hunt case, merely establishing some early sign of control does not mean squat if you don’t fulfill all the applicable criteria for legal ownership.
And the analogy to Pierson v. Post helps for another reason. In that case, it was pretty hard to argue that Post had, by merely chasing the fox, come even close to the kind of manucaption (physical deprivation of liberty) that centuries of courts and commentators agreed was necessary to reduce a wild animal to private ownership. But there was a dissenter: Livingstone, J., argued that whatever outcome the law actually dictated said, everyone knew that was bullshit.
No, seriously: Livingstone made a half-hearted argument to contest the majority’s mountain of actual legal authority with some citations of his own, but the real driver of his opinion seemed to be that Post should win because, well, “every votary of Diana” (i.e., anyone who knows squat about hunting) knew Pierson was being major uncool by interfering with an ongoing fox hunt and should lose.
This is, as I tell my students when I teach it, one of the easiest to make and least convincing claims in the entire firmament of argument: the ol’ “it’s just common sense” assertion. And in the case of the Steeler Jesse James, “common sense” is the thin reed on which countless commentators have staked their claim that the NFL got it wrong. Consider this inanity from Mark Maske of the Chicago Tribune:
“One day, the NFL will have a common-sense approach to what's a catch and what isn't. If it looks like a catch, it will be a catch. If it doesn't look like a catch, it won't be a catch.”
Ohhh, now I see. If only the NFL used the ol’ common-sense rule then everything would be clear. The rule would be “if it looks like a catch, it’s a catch.” Sounds like someone is channeling the ghost of Potter Stewart, the Supreme Court Justice who famously defined pornography by saying “I know it when I see it.”
The problem with ‘common sense’ as a standard is that while it’s a great-sounding way to make believe that our gut instincts are the only guide we need to make sense of disputes in the world, in reality it’s like Santa Claus who (sorry kids) does not exist. What’s common sense to you may not be common sense to me may not be common sense to that guy, and so on.
What ‘common sense’ really means is ‘I feel a certain way.’ And ‘my feelings say so’ is a terrible standard for resolving hard questions, because it provides no objective metric for resolution and expands rather than limits ground for disagreement. Not to mention that “common sense” has been trotted out as a defense for some of the worst, most indefensible laws and policies in American history—segregation, slavery, limiting the vote to the wealthy and propertied, etc. It’s an argument you make when you don’t really have an argument to make.
Which is why, at the end of the day, the NFL catch rule is a good, or at least good-enough, one. It sets a clear standard that refs can use to say some catches count and others don’t. It has a nice bright-line structure—yes, the much-maligned standard that a catch must “survive the ground”. And it avoids some arbitrary alternative standard like insisting that a receiver must control the ball for X number of seconds, or an incoherent alternative standard like the bizarre notion of a “football move.”
The catch rule is not perfect, of course. At times it may produce results that do not quite match up with our feelings that a catch was a catch, but then again that’s the whole point. If we moved to a “common sense” rule that prioritized our feelings above an objective standard, we wouldn’t have a rule at all, but just the conflicting intuitions of refs, players, officials, and fans. So just like in Pierson v. Post, you may not like the outcome in this case, but the rule serves purposes that easily justify putting up with occasional anomalous applications.
As Walter Sobchak admonished Smokey in The Big Lebowski, “This is not ‘Nam—there are rules.” Rules save us from the undifferentiated chaos that we’d face if we had to resolve a hundred different feelings about what “common sense” means. And whether we’re talking about possession of a feral fox or a flying football, the marginal costs of rules are well worth the advantages they bring in terms of stability and predictability. Also, go Pats.
Hoyos: The Outlaw’s Possession, or, How in a Just World Jesse James Scored a Touchdown and Sent the Pats to Ignominious Defeat
When I first saw James’ reception in replay, I thought that by rule it was clearly not a catch. A player falling down while making a catch must maintain control of the football after making contact with the ground. Following the game, NFL officials referred to it as “surviving the ground” when explaining the decision to overturn the call on the field. So, no catch, no touchdown, and yet another disappointing loss to the Pats.But the question of whether it was a catch (and hence touchdown) according to the existing rule is different from whether the rule is the correct one. So, after further, um, review, I want to suggest that law, policy, equity, and custom all favor a rule that would recognize James’ catch as a catch.
First possession requires both an intent to possess and actual, corporeal possession. This question is somewhat complicated in the football context. With wild animals or baseballs, the property belongs to no one. But in football, the offense is deemed to have “possession” of the football. When the quarterback (usually) throws the ball to a receiver, the intent is not to abandon possession of the football but to transfer possession from the quarterback to the receiver. Nonetheless, whatever the quarterback’s intent, the defensive players have as much right to possession of a thrown football as the offensive players. An interception is akin to adverse possession of the football. We might call the pass, then, constructive abandonment, or partial constructive abandonment.
Since there is no intent to abandon possession in constructive abandonment, the rules regarding possession should favor the offensive team. In James’ case, James clearly had an intent to possess, as he reached his hands out to catch the pass thrown from the quarterback. James also physically possessed the football, making a conscious decision after securing the football to reach the ball out across the goal line. The NFL even has a rule that once the football crosses the goal line, the play is over. Since James had an intent to possess, and physically possessed the ball long enough to make a decision as to what to do with it, he clearly had possession.
The question of course is what to do with the fact that James was falling to the ground as he made the catch. This is where policy comes in. Wholly apart from winning or losing, scoring should be a high priority for almost any sport. Scores are exciting for both players and fans, and the rules should encourage scoring plays whenever possible.
Since the NFL has already determined that a play is dead as soon as the ball crosses the goal line, the question should be whether the offensive receiver had possession at the decisive moment when the ball crosses the goal line, not whether the receiver “survived the ground.” Surviving the ground can make sense if the receiver catches the ball within the field of play where there is no decisive moment, and the first down marker is less defined than the goal line. Since the player is still within the field of play, completing the catch after surviving the ground respects both the offensive team’s possession and the constructive abandonment of the pass.
The decisive moment rule facilitates scoring in a way that is consistent with current NFL rules. As mentioned, the NFL already deems the play dead when the ball crosses the goal line. Moreover, the NFL has also determined that the ground cannot cause a fumble. Putting one and one together equals a touchdown for James.
The decisive moment rule could also be applied to side lines and end lines at the back of end zones. This would also reward the toe-tapping skill that only the best professional receivers have mastered. (Steelers wideout Antonio Brown, by the way, does not need such an accommodation.) Side lines and end lines, like goal lines, are also clearly marked on the field.
Equity also lies in favor of James’. Dan LeBetard made this case on his sport show “The Dan LeBetard Show with Stugotz.” In essence, players are brutalizing their bodies in the “forceful acquisition of real estate,” and thus should be rewarded in any close call. The reward should be the most exciting outcome. In this context, the reward would be the touchdown. But in other situations the reward could be, for example, the turnover. In James’ case, no Patriots player caused the loss of control of the football; it was only the ground. Without any countervailing equity concerns, the scales of fairness lie in James’ favor.
Finally, custom also lies in James’s favor. Time and again, watching the sports commentary following the game, voice was given to the idea that “this has always been a catch.” James himself confessed that despite playing football most of his life, he now doubted his ability to understand what a touchdown is and isn’t. And once again, calls were issued to change a rule that nobody understands, or even if they understand it, disagree with it. If the common perception recognizes James’ catch as a touchdown, then refusing to recognize it jeopardizes the legitimacy of the NFL’s rules and product.
So while the call may have been correct according to the NFL’s rules as they currently exist, the rules do not adequately capture or reflect basic ideas about first possession.
Thursday, December 14, 2017
2018 Affordable Housing & Community Development Law
Law Student Legal Writing Competition
This writing competition (“Competition”) is sponsored by the Forum on Affordable Housing and Community Development Law (“Forum”) of the American Bar Association (“ABA”), 321 N. Clark Street, Chicago, IL 60654 (the “Sponsor”).
The goal of the competition is to encourage law students to become involved in the Forum. It is also intended to attract students to the affordable housing, community development or pro bono practice fields, and to encourage scholarship in these fields. Each entrant must follow the rules of the competition detailed herein.
Open to all law students who are at the time of entry, (a) enrolled in a law school that is at the time of entry, ABA Accredited, (b) members of the ABA and the Forum, (c) at least 21 years old, and (d) U.S. citizens or legal permanent residents. Employees of the ABA, its respective affiliates, and immediate family or household members of such employees are not eligible for the Competition.
Entries should address any legal issue regarding affordable housing and/or community development law.
(a) Entries must be original, unpublished work. Any relevant article or essay may be submitted for the competition, including writing submitted for academic credit. Submissions must not have been previously published in any media. Only one essay, per competition theme, may be submitted by each entrant. Failure to submit an original essay will result in disqualification and selection of a new winner. Entries should be between 25-50 double-spaced pages, with 1-inch margins, in Times New Roman, 12 pt. size Font. Articles should include footnotes in Bluebook format (single spaced in Times New Roman, 10 pt. size font and which shall count towards the word limit).
(b) There is no entry form of any kind. Entries should be submitted in Word format. All author-identifying information should be removed from the entry.
(c) A separate title page should be attached and must contain the entry’s title, the student's name, law school and expected graduation year, and the student's contact information including mailing address, phone number(s), and email addre
(d) Entries must be submitted by e-mail to the Editor-in-Chief of the Journal of Affordable Housing and Community Development Law (the “Journal”), Michael T. Iglesias, email@example.com no later than 11:59 PM Central Time, on March 3, 2018. The Sponsor is not responsible for errors or for lost, late, or misdirected email, or telecommunication or hardware or software failures, including by reason of any bug or computer virus or other failur
Selection and Notification of Winners:
The entries will be judged anonymously by a five (5) person committee comprised of members of the Forum. Decision of the Sponsor (including the committee judging the entries are final) . Entries will be judged based on the following criteria: clarity of the topic, significance of the topic, manner in which the topic is treated, organization, quality of analysis, quality of research, authority, and citations, and quality of grammar, syntax, and form. The winning entry will be notified by email by April 20, 2018, 11:59 pm Central Time. The winner must acknowledge and confirm agreement to the terms and conditions of winning the competition no later than May 1, 2018, after which he/she forfeits the prizes and another winner may be selected.
A single winning entry, as judged by the selection committee, will be eligible to receive a prize of (a) a $1,000 cash prize and (b) up to $1,000 reimbursement for hotel (Mandarin Oriental Hotel) and transportation expenses (not to exceed $500) to attend the Forum's Annual Conference occurring May 23-25, 2018, in Washington, D.C.* The Sponsor may substitute a prize of equal or greater value in its sole discretion. Prizes are non- transferable and cannot be substituted by the winner. Cash equivalent for prizes is not available. Winners will be solely responsible for reporting and payment of all taxes (federal, state, local or other) on prizes, which will include the value of any accommodations and airfare. Winners will be required to complete a W-9, affidavit of eligibility, tax acknowledgment and liability release for tax purposes. All forms must be completed and returned via email to Dawn R. Holiday at firstname.lastname@example.org within 15 business days of receipt, or prizes will be considered forfeited and another winner may be named. The decision of the Sponsor, including the judging committee is final.
At the sole discretion of the Sponsor, the winning essay may be selected for publication in the Journal. If selected for publication, winner will be required to sign a standard publication agreement giving the ABA the right of first publication. Please note: The Forum on Affordable Housing and Community Development Law must have the first right of publication of the selected essay.
License/Grant of Rights:
By entering, the winning entrant consents to the publication of her/his entry by the ABA, understands that such publication is not guaranteed, and grants the ABA the following rights: (1) the exclusive worldwide right of first publication of their entry in any and all ABA media or form of communication; (2) the non-exclusive worldwide right, in ABA’s sole discretion, to use, transcribe, publish reproduce, distribute, sell (as part of an ABA publication) or display the entry, alone or in conjunction with other materials; (3) the right to edit the essay to conform to the publication’s standards of style, technological requirements, language, grammar and punctuation, provided the meaning of the essay is not materially altered; and (4) the non-exclusive worldwide right to use the winner’s name and likeness in connection with the essay or this Competition, in each case, without further compensation. Additionally, the winning entrant must execute a separate publication agreement giving the ABA the publication rights enumerated above and the right to use the article for any other purpose related to the ABA mission. If the winner fails to sign the agreement within 30 calendar days of receipt, the prize will be considered forfeited and another winner named
All entries must be emailed by March 3, 2018, 11:59 pm Central.
Odds of Winning:
Chances of winning may vary depending on the number of entries. However, Sponsor reserves the right not to award any prize if the judges determine that no entries are of sufficient quality to merit selection that year.
Laws and Regulations:
This Competition is governed by U.S. law and all relevant federal, state, and local laws and regulations apply. By entering, all participants agree that the competition shall be governed by the laws of the State of Illinois, that the courts of Illinois shall have exclusive jurisdiction, and that Cook County, Illinois shall be the venue for any dispute or litigation relating to or arising from the competition. Void where prohibited by law.
Conditions of Participation:
By participating, each entrant agrees to these Official Rules and the decisions of the Sponsor and releases and discharges the Sponsor, including but not limited to the ABA, subsidiary and affiliated entities, and each of their respective officers, directors, members, employees, independent contractors, agents, representatives, successors and assigns (collectively “Released Parties”) from any and all liability whatsoever in connection with this Competition, including without limitation legal claims, costs, injuries, losses or damages, demands or actions of any kind (including without limitation personal injuries, death, damage to, loss or destruction of property, rights of publicity or privacy, defamation, or portrayal in a false light) (collectively “Claims”). Except where prohibited, acceptance of a prize constitutes a release by any winner of the Released Parties of any and all Claims in connection with the administration of this promotion and the use, misuse or possession of any prize. All entries submitted to the ABA become the property of the ABA and will not be returned; however, entrants who do not win first- place may submit their entries for publication elsewhere. Entrants must not submit their articles for publication elsewhere prior to December 11, 2017. All expenses involved in preparing and submitting an entry are the sole responsibility of the entrant.
Sponsor is not responsible for errors or for lost, late, or misdirected mail or email, or telecommunication or hardware or software failures, including by reason of any bug or computer virus or other failure. Sponsor may cancel, modify or terminate the promotion if it is not capable of completion as planned, including by reason of infection by computer virus, tampering, unauthorized intervention, force majeure or technical difficulties of any kind.
Announcement of Winners: For a list of prize winners, send a self-addressed stamped envelope by May 31, 2018 to the Forum on Affordable Housing and Community Development Law of the American Bar Association, 321 N. Clark Street, Chicago, IL 60654.
Any individual may elect to opt out of receiving future contest or competition mailings from the ABA by calling the ABA Service Center at 800-285-2221.
Information provided by entrants in connection with this Competition is subject to the
The Forum on Affordable Housing and Community Development Law of the American
Bar Association, 321 N. Clark Street, Chicago, IL 60654.
Please contact Dawn R. Holiday at email@example.com, if you have any questions.
*Coach airfare, 21-day advance purchase and lodging at the conference hotel for 2 nights.
Wednesday, November 29, 2017
(This just in from Troy Rule @ASU:) The Program on Law and Sustainability at ASU Law launched the annual Sustainability Conference of American Legal Educators in May 2015. This innovative conference is a national event hosted each spring for legal academics researching in environmental sustainability-related areas. Roughly 50 professors from law schools throughout North America convene to present their most current research. At the conference, the program also awards the newest winner of the Morrison Prize Contest—an annual contest that awards a $10,000 cash prize to the author(s) of the most influential sustainability-related law review article published in the previous year.
This year's ambitious conference is the program’s signature contribution to the worldwide sustainability movement—a movement whose influence continues to expand throughout legal academia. The conference offers a unique forum for subject matter areas pertaining to environmental sustainability, including but not limited to:
- Climate Change
- Energy Law
- Water Law and Policy
- Environmental Law and Sustainability
- Sustainability Policy and Natural Resources
- Land Use and Zoning Law
- Sustainable Development
- Disaster Law
Now accepting proposals for the 2018 Call for Conference Speakers and entries for the 2018 Morrison Prize Contest – Click here for more information
Sunday, November 19, 2017
Now that Richard Cordray is on his way out as director of the Consumer Financial Protection Bureau (CFPB), banking and financial services lobbyists are gearing up to attempt to unwind some of the bureau’s regulatory work and to put a halt to some of its more aggressive enforcement actions.
And it looks like they’ll likely get their way since President Trump appears to be ready to appoint (at least on an interim basis) the current director of the White House Office of Management and Budget, Mick Mulvaney.
For property professors (particularly the housing and real estate folks), there are some important things we should be on the look out for as things unfold. This is because the CFPB has played a major role in reshaping the way Americans have access to property—or more specifically, how they have access to mortgage credit that leads to homeownership.
One of the most important aspects of the Dodd-Frank Act when it comes to mortgage lending was the creation of a rule that requires firms that originate mortgage loans to make a good faith determination that the borrower has the ability to pay the loan. This may seem obvious, but in the lead-up to the 2008 crisis it was far from a universal practice. In fact, it was not at all uncommon for a mortgage lender to extend credit to a borrower using only the individual’s “stated income” on the loan application, without the lender ever conducting any independent verification or requiring documentation. This was often called “low-doc” or “no-doc” lending because hardly any documentation about the borrower was needed to advance credit. In certain instances the borrower could put down any number they wanted and the lender would nevertheless make the loan, relying solely on the ever-rising value of the real estate subject to the mortgage.
Mortgage lenders would also manufacture pay stubs, employment data, and income information in order to form the basis of mortgage underwriting. And some mortgage lenders—far from being concerned with a borrower’s credit worthiness—would actually encourage their employees to disregard a borrower’s actual ability to repay. One company called Long Beach Mortgage required little documentation, often accepting letters of credit from landlords, fake tax returns, or suspicious-looking pay stubs in lieu of verified statements of income. One former employee said that higher-ups at the company would frequently offer gifts to the loan reviewers in exchange for looking the other way on questionable loan applications. Antoinette Hendryx, a former loan reviewer for Long Beach Mortgage, said “’They’d offer kickbacks of money’” or said things like “’I’ll buy you a bottle of Dom Perignon.’ It was just crazy.”
So Dodd-Frank aimed to force mortgage lenders to study a borrower’s actual ability to repay a loan before extending credit. Dodd-Frank also empowered the CFPB to create a rule that would set forth a safe harbor for how lenders could meet the ability to repay requirement. This safe harbor rule (called the “Qualified Mortgage”) essentially states that if a lender makes a loan that is very “vanilla” (i.e., no predatory or out of the ordinary features, regular payment structure, fully amortized, etc.) then that lender will be deemed to have met the standard. As I’ve written here, lenders have fully embraced the Qualified Mortgage. Indeed, mortgage origination data indicate that something like 99 percent of all new mortgage loans are “Qualified Mortgages.”
But many lenders and industry advocates have argued that the Qualified Mortgage is hurting mortgage lending. And the Trump administration (via a report by the U.S. Treasury Department this past summer) indicated that it desired to loosen the ability to repay rule and change the qualified mortgage. Those goals might very well be met under a Director Mulvaney.
I wrote back in October of last year (here) on this blog that lending for low- to moderate-income borrowers and borrowers of color is indeed down. And total loan originations between 2014 and 2015 definitely took a dip (table with origination numbers for comparison here). But is the Qualified Mortgage and the Ability to Repay the reason for this?
A few months ago in September 2017, Federal Reserve researchers, using Home Mortgage Disclosure Act data, studied the decline in lending to low-income borrowers by major, traditional financial institutions. I thought their findings were interesting and useful in thinking about the causes of credit tightening. Quoting from their paper:
The Decline in FHA Lending
A second trend in the mortgage originations of the largest banks that might help explain their declining [low- and moderate-income (LMI)] share is a coincident decline in their origination of loans insured by the Federal Housing Administration (FHA). FHA insurance protects lenders against losses in the event of borrower default, and so allows borrowers with relatively small down payments or relatively low credit scores to access mortgage credit they might otherwise be denied. FHA loans are disproportionately used by LMI borrowers for these reasons.5
As shown in figure 3, the FHA share of loans originated by the three largest banks fell from 43 percent in 2010 to just 5 percent in 2016. Because FHA loans are much more likely to be originated to LMI borrowers, this decline is likely related to these banks' decrease in LMI lending. The share of FHA lending also declined for other banks and for nonbank lenders, though not as sharply as for the largest three banks.
The disproportionately large decline in both LMI and FHA lending by the largest three banks raises two questions. First, why did these largest three bank lenders reduce their FHA originations by more than other lenders during this period? Second, how much of the "excess" decline in lending to LMI borrowers by the three largest banks can be accounted for by the larger decline in FHA mortgages?
Reasons for the Decline in FHA Lending
One possible reason for the disproportionate decline in FHA lending by the largest banks could be related to recent litigation brought against them by the Department of Justice under the False Claims Act. The Department of Justice has argued that lenders who improperly certify mortgages as eligible for FHA insurance may be held liable for making false claims to the United States government, subjecting them to treble damages. Since 2011, the Department of Justice has sued a number of large mortgage lenders for violations of the False Claims Act, including each of the largest three bank lenders. The costs of these lawsuits have been large: for example, Wells Fargo reached a $1.2 billion settlement with the Department of Justice in 2016. While other lenders have also been targeted in these lawsuits, large banks have been particularly explicit about the effect of these lawsuits on their FHA lending. For example, in an April 2015 letter to shareholders, JP Morgan Chase CEO Jamie Dimon explained that the company had reduced its FHA lending in part because of the risk "from the penalties that the government charges if you make a mistake."
Several other factors have also contributed to the overall decrease in FHA lending since 2010. First, rising FHA insurance premiums over this period likely shifted demand away from the FHA. Second, lenders have faced significant uncertainty around the FHA's "indemnification" policy, which defines circumstances under which FHA insurance is voided because the loans are judged to be improperly underwritten. Third, the cost of servicing a delinquent FHA mortgage rose significantly during this period. While each of these factors likely raises the expected costs associated with FHA-guaranteed mortgages for all lenders, they could have induced larger reactions from the large bank lenders, whose overall profits are less dependent on their mortgage lending business.
So I think we need more data and analysis in order to better assess the effect of the Qualified Mortgage and the Ability to Repay on mortgage lending and the availability of credit. In another Fed study that was done in 2014 (which was the year that the new CFPB rules went into affect—although many lenders already started to comply the year before just to get ahead of the game), the data indicated that the rules caused no material difference in mortgage lending. Will the new CFPB director go through a probing process before making substantial changes to these important underwriting rules? And if they change, what will mortgage underwriting look like in the future? We’ll have to wait and see.
(Photo Credit Above: Athens Area Habitat for Humanity)