Saturday, October 30, 2010

Another View on Foreclosure Moratoria

I enjoyed Tanya's insightful Huffington Post op-ed on foreclosure moratoria.   Her concerns about the effect of a foreclosure moratorium on our confidence in private contracts is well-taken.  But, for reasons explained below, I have to very respectfully disagree with her conclusions. 

History is always a great teacher.  As I've argued elsewhere, that's especially true when it comes to the mortgage crisis.  Before the Obama administration concludes that a foreclosure moratorium is a poor policy choice because its potential effects on the mortgage loan market, it should look at the actual effects on the mortage loan market of previous foreclosure moratoria.

As David C. Wheelock explains here and here, during the foreclosure crisis of the Great Depression, 33 states enacted some form of foreclosure moratoria, often limited to those borrowers most likely to be able to repay their loans with just a little modification and/or time.  Wheelock clearly supports Tanya's contention that interfering with private contracts did raise borrowing costs for later borrowers.  But, although the moratoria did not come without some cost to future borrowers, their long-term negative impact seems to have been fairly negligble.  Meanwhile, the moratoria had a dramatic impact on lowering the numbers of foreclosures, and not just during the moratoria periods.  In many cases, moratoria gave the federal government, lenders and borrowers some breathing space to re-structure loans so that foreclosures were avoided altogether. 

As Tanya discusses in her op-ed, in many cases lenders are behaving irrationally, foreclosing on loans with no prospect of recovering their losses through sales in the current market.  Simultaneously, families are rendered homeless, worsening the general economic crisis even without consideration of the human costs, and neighborhoods are devastated, lowering property values for those who aren't deliquent -- but increasing the chances they will become delinquent, since lower property values can take homeowners underwater, making refinancing adjustable rate loans impossible at the end of their term.

And all of that is without even considering the very real possibility that lenders are foreclosing on loans that they have no legal right to foreclose upon, which we know is happening in the rush to foreclose.

Stopping irrational -- and sometimes illegal -- behavior, to the ultimate benefit of all parties, seems to me generally a very good idea.  That's all a well-designed foreclosure moratorium does.  We know that, because we've done it before.

Mark A. Edwards

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October 30, 2010 in Home and Housing, Mortgage Crisis | Permalink | Comments (2) | TrackBack (0)

Friday, October 29, 2010

Want to Join the AALS PropertyProf Listserv?

Just fill out this form.

Ben Barros

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October 29, 2010 | Permalink | Comments (3) | TrackBack (0)

Wednesday, October 27, 2010

A Government-Mandated Foreclosure Moratorium is a Popular (and Bad) Idea

I apologize for the shameless self-promotion, but I just had an op-ed published on Huffington Post.  The Washington Post reported today that over half of Americans support a mandatory moratorium.  In my piece, I defend the White House's resistence to popular calls for a government-mandated foreclosure moratorium.

I didn't delve into this point in the op-ed, but does anyone know what the proposed legal basis of a foreclosure moratorium might be?  I find the idea that the President or Congress could order state courts to halt hundreds of thousands of cases between private parties fairly mind-boggling.   

Tanya Marsh

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October 27, 2010 in Real Estate Finance | Permalink | Comments (3) | TrackBack (0)

Contingent Remainders and Executory Interests

Steve's last post mentioned a recent discussion of contingent remainders and executory interests on the Property Prof listserv.  In case you don't have access to the listserv, and are curious about the discussion, here is a quick summary.  The question involved this conveyance:  "to A for life, then to A's children who reach the age of 21."  A is alive, and has two children, B, age 24, and C, age 17.  A has a life estate, and B has a vested remainder subject to open.  But what does C have?  A contingent remainder or an executory interest?  C's interest looks a bit like a contingent remainder, in that it will become possessory only at the natural end of the preceding estate, but it also looks like an executory interest, in that it will divest part of B's vested remainder when and if C turns 21.  The majority view on the listserv was that under modern law, C should be seen as having an executory interest, though there were still a few folks who thought it was best seen as a contingent remainder.  There also was consensus that the distinction between the two doesn't matter in modern law, so this was a true academic debate in every sense of the word "academic."

Ben Barros

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October 27, 2010 in Future Interests and the RAP | Permalink | Comments (1) | TrackBack (0)

How Competitive is the Property Market?

An aspiring property prof writes:

I am a practicing lawyer (a real-property litigation specialist, actually) giving serious consideration to transitioning to academia, and property theory is my strongest interest. Your blog is great! I want to learn whether property is a highly competitive field to enter as a new professor. I understand that certain fields (like con law, say) are more competitive than business-related fields like tax or corporations. Does anyone have a sense where property law fits on that spectrum? Thanks in advance.

I'd say that Property is much closer to Tax and Corporations/Bus Orgs than it is to Con Law.  Plus, if you do property work, you probably are qualified to teach related high-demand subjects like Contracts and Corporations/Bus Orgs.  The trick for an experienced practicing lawyer is to become a strong academic candidate.  Here, the most important thing to do is to write and place at least one solid law review article.  There is a lot of good advice out there in the blogosphere on becoming a good candidate.  Among other things, Tanya's post on her interview experience might be helpful.

Ben Barros

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October 27, 2010 in Help Wanted | Permalink | Comments (1) | TrackBack (0)

Is Property Dead?

For those not on the propertyprof listserve, let me report that there has been a very lively discussion about future interests over the last week or so.  As I have followed the email thread, I have been remarkably impressed by the passion, learning, and intellectual discipline of my colleagues.  The conversation has been scholarly yet accessible, and full of strong opinions yet remarkably cordial.  All in all, it's been a real advertisement for everything that's great about working in the property field.

And yet...  And yet, the discussion has also left me a little cold.  The subtle difference between executory interests and contingent remainders has sparked more discussion than any other topic over the last year?  Really?  It just feels small somehow, persnickety even.  Disciplines naturally ebb and flow over the course of years.  Is property just in a lull? 

Steve Clowney

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October 27, 2010 in Future Interests and the RAP | Permalink | Comments (2) | TrackBack (0)

Tuesday, October 26, 2010

Why Sprawl is Good

Rick Duncan (Nebraska) comments.

Ben Barros

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October 26, 2010 in Land Use | Permalink | Comments (0) | TrackBack (0)

Monday, October 25, 2010

Jon Stewart Rally to Restore Sanity

I tried to think of a property hook, but gave up.  Any Property Profs going to the Rally to Restore Sanity in DC this Saturday?  My 4th grader has Friday off from school, so we're going to head to the Smithsonian on Friday, hang out with some reasonable people on Saturday, and get back in time for trick or treating.

I'm trying to find the right shirt to wear.  Current contenders are here, here, and here.

Anyone else making the trip?

Tanya Marsh

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October 25, 2010 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Hiring Property Profs

Well, we're just days away from the AALS hiring conference in Washington.  Listening to the drums, it sounds like a number of law schools are out there looking for new property profs.  Cincinnati, Elon, Florida State, Fordham, Florida International, Hamline, New Mexico, Richmond, Roger Williams, St. Johns, Stetson, Touro, Utah, and West Virginia have all expressed interest in candidates that want to teach property. 

General advice on the hiring market is plentiful, but I was wondering if the readership had any particular advice for budding property scholars.  I would venture that it's important to give some thought to how you're going to teach the course (I was asked on a few occasions how I would teach future interests).  Any other thoughts?

Steve Clowney

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October 25, 2010 | Permalink | Comments (1) | TrackBack (0)

Public Housing Problems

Cabrini Gre Yesterday's N.Y. Times ran story about the dire state of public housing around the country.  Some key 

Newark . . . has shuttered 600 units that it cannot afford to fix. The city was given federal approval to raze 1,004 more, but it cannot pay for the demolition. In Washington, the District of Columbia Housing Authority . . . is still $200 million short of what the authority says it needs for repairs. Baltimore’s housing authority needs $860 million for crucial repairs, said the housing commissioner, Paul T. Graziano; it has demolished or shuttered 33 percent of its units since the 1990s and has another 600 “on the verge of failure,” with falling cabinets, unhinged doors and aging electrical systems.

The case for housing vouchers looks stronger and stronger everyday, but what to do about these aging units that still exist?  Is it more cost effective to knock them down and start over (with different policies) or spend the money to rehab a the crumbling buildings?

Steve Clowney

Pic of Cabrini Green used under creative commons license

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October 25, 2010 | Permalink | Comments (0) | TrackBack (0)