Friday, October 22, 2010

Has the Worm Turned?

As the foreclosure crisis developed, it became quite clear that lenders were more than willing to assert the full scope of their legal rights (and then some) in subprime lending, securitizing and selling mortgage-backed securities, and foreclosing on delinquent loans.  Castigated for reckless lending to borrowers who didn't understand and couldn't hope to re-pay their loans, lenders seemed to collectively shrug and respond, 'Hey, it's legal.' 

Repeated pleas that lenders not evict blameless tenants in foreclosed properties (if only as a matter of self-interest, since lenders would have some income from the property) fell on deaf ears, requiring legislatures to act.  And as Brent T. White incisively argued, underwater homeowners felt a sense of moral and social responsibility that was not shared by their lenders, who enforced the letter of the law to maximize profits and minimize losses.

Has the worm turned?  As Tanya noted her post below, foreclosures are grinding to a halt because borrowers are having the temerity to demand in court that every last bit of the lenders' paperwork is in order -- and as it turns out, because lending was so reckless, and loans were sold and re-sold and packaged and re-packaged with such velocity on the go-go secondary and tertiary markets, often by companies that disappeared with their paperwork when the crisis began, there is precious little valid paperwork.  I imagine that somewhere, in some road-side storage facility in Nevada, a lot of documents that once belonged to a fly-by-night 'no-asset, no-income' lender are yellowing and curling at the edges.

And today in the New York Times, comes the story of a bunch of buyers who are using the letter of the law to back out of condo purchase agreements with their deposits in tow.  They aren't using the law as it was intended, but they are using it to its letter.  Is that unfair?  Hey, it's legal.

I have to admit, I'm disturbed by my willingness to cackle and shrug my shoulders.  By doing that, I'm mirroring the attitude of the mortgage-back securities machine that caused the crisis in the first place, an attitude which has disturbed a lot of us for a long time.  But, since the New York Times also reported today that on Wall Street, average pay increased 20% this year, I think I'll savor the impotent sense of schadenfreude for at least a few hours.

P.S. If you need help maintaining your irresponsible sense of glee at lenders' troubles, give a listen to the first segment of this This American Life episode, in which we meet several sneeringly ungrateful Wall Street bailout beneficiaries.  That should help.

Mark A. Edwards

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October 22, 2010 in Home and Housing, Mortgage Crisis, Real Estate Transactions | Permalink | Comments (0) | TrackBack (0)

The Road Less Traveled

A stunning composite image of the 26 million individual road segments in the United States. No other elements (such as the outline of geographic features) have been added to this map.  Nonetheless, facts about both geography and population density emerge as roads move to avoid mountains and disappear in areas of low population.

Steve Clowney

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October 22, 2010 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 21, 2010

Great Places

The American Planning Association names the top ten Public Spaces in America.  Winners include the Ferry Building in San Francisco and Bryant Park in New York.

Steve Clowney

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October 21, 2010 | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 20, 2010

Recording Acts, MERS, and the Foreclosure Crisis

I haven't posted lately for a very good reason -- I've been distracted by the recording acts, the residential foreclosure crisis, and the Mortgage Electronic Recording System (MERS).  I've been fascinated by the news articles making vague and mysterious references to lender affidavits which are taking the place of missing "paperwork."  Some of the missing paperwork, no doubt, is evidence (in the form of a mortgage assignment) that the foreclosing lender actually owns the debt that it is attempting to foreclose.  Presumably, if one is in the business of lending and purchasing debt, keeping good records about what debt one actually owns would be a fairly fundamental concept.  I am constantly surprised that in reality it isn't that simple. 

MERS, a private, parallel recording system owned by and for the benefit of the mortgage industry, has been .... I think the right word here is "interfering" ... with the American land title system since 1995.  Basically, lenders become dues-paying members of MERS then record an original mortgage with MERS named as the lender's "nominee" or "mortgagee of record."  But MERS never actually owns the debt -- it is just an agent.  Apply this legal fiction to state mortgage law and hilarity, or possible a foreclosure debacle, ensues.  Christopher Peterson (Utah) has written a very thorough article on the subject which was published this summer in the University of Cincinnati Law Review or can be found on SSRN here: "Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System".

So, I've been spending my free time learning more about the foreclosure moratorium and writing a short essay that I hope to publish in an online law review.  In my essay, I argue that this whole mess demonstrates that the time has come to replace our local land title recording system with a single federal online system organized around the kind of searching technology that we take for granted on our smartphones.  If anyone has any advice on submitting to an online journal, please let me know.

Tanya Marsh

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October 20, 2010 in Mortgage Crisis | Permalink | Comments (6) | TrackBack (0)

Tuesday, October 19, 2010

Sample Real Estate Financing Documents for Teaching?

I'm looking for forms of (a) a deed of trust; (b) a sale-leaseback; (c) an installement land contract; and (d) a subordination agreement from a real estate context to use with my students.  I have the Fannie Mae form deed of trust, but would like to see other samples.  Forms for notes and mortgages are pretty easy to come by, but if you have any that you really like, I'd love to see those as well.  If you have any such forms that you'd be willing to share, please e-mail me - .


Ben Barros

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October 19, 2010 in Real Estate Finance, Teaching | Permalink | Comments (0) | TrackBack (0)

Low Buildings, High Costs

Matt Yglesias on the high cost of the height restrictions that Washington D.C. imposes on builders:

[G]overnments of growing municipalities need to understand that urban space is a hugely valuable commodity. Rules which mandate that the space be used inefficiently are extremely costly. Sometimes it’s a price worth paying—you wouldn’t want a city with zero parks—but there are limits to how much it makes sense to sacrifice for aesthetics.

The thrust of Yglesias's argument is that the height restrictions unnecessarily push low skill jobs into the suburbs.  In a follow-up post, Atrios also puts forth out that restricting skyscrapers creates more medium rises at the expense of more human scale buildings. 

I think these arguments have some validity, but they miss a vital point. The authors ignore the important role that architecture plays in stabilizing and propagating both cultural ideals and group identity.  There's something special about being from a place like Pella, Iowa or Solvang, California or Santa Fe, New Mexico where all the buildings have the same look.  It says something about the place, the people, and the value of history.  For me, there's similar meaning in the District's regulations, which have preserved the Washington Monument as the tallest building around.

Steve Clowney

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October 19, 2010 | Permalink | Comments (0) | TrackBack (0)

Monday, October 18, 2010

Property Symposia

It seems to me that there is a relative lack of law review symposia on property-related issues.  I don't have any solid data to go on, but it seems to me that there should be more property symposia given that (a) there are lots of property profs out there and (b) there are so many amazingly cool property issues that would benefit from consideration in a symposium.

This leads me to two questions.  First, do you agree that property symposia seem scarce?  Second, what specific subjects do you think would make good symposium topics?  Off the top of my head, I'd like to see symposia on (1) the judicial takings issue; (2) home and the law; (3) statutory reform of property law; (4) the future of estates, future interests, and the RAP in light of the proposed Restatement (Third); (5) the future of adverse possession; (6) common interest communities; (7) critical evaluations of the new "progressive" property; (8) the relationship between property and liberty.

Organizing symposia, of course, can be a bit of a pain.  But if there is enough interest out there, it might be possible to come up with a plan to coordinate symposia, perhaps under the auspices of ALPS.

Ben Barros

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October 18, 2010 in ALPS, Conferences, Recent Scholarship | Permalink | Comments (3) | TrackBack (0)