December 9, 2011
The L.A. Times focuses on local efforts to lift a ban on artistic murals. LA has struggled to find a way to allow murals while still regulating billboards:
A proposed new ordinance would allow artists to create murals legally on private property across Los Angeles as long as the property owners agree. If approved, the ordinance would end a controversial prohibition on murals that has left city officials and artists grappling over what is legal.
Councilman José Huizar will join muralists and art conservationists Wednesday morning in the Boyle Heights Arts District to unveil the draft local law. It essentially would legalize murals when property owners and artists agree to maintain them for five years and no money is exchanged.
The Future of the Globe in a World of Google Maps
For all you map-lovers out there, Slate has a great piece about the past and future of the globe:
But there may be hope for the humble globe. Bound atlases have stood up to digital encroachment much better than encyclopedias, because no screen can yet duplicate the tactile, immersive experience of exploring the Earth via paper maps. Globes have the same advantage, only in three dimensions. I’ve been typing these last few paragraphs amid constant interruptions from my 4-year-old daughter, who can’t keep her hands off the globe at my side. “Are these mountains?” she wants to know, rubbing her fingers over the relief of the Andes. “Why does this red line stay in the same place when I spin the world?” she asks about the equator.
DiLorenzo on Mortgage Market Reform in the U.S. and U.K.
VIncent DiLorenzo (St. Johns) has posted Barriers to Market Discipline: A Comparartive Study of Mortgage Market Reforms on SSRN. Here's the abstract:
This paper explores mortgage market reforms in the U.S. and U.K. in response to the recent mortgage market crisis. Two issues are examined. First, the paper explores the extent to which regulatory bodies have recognized behavioral barriers to market discipline on the part of not only consumers but also industry actors. Second the paper examines the varied response in the U.S. and U.K. to both market limitations and behavioral limitations to self-protection and self-discipline that led to unsafe lending practices in the period 2003 through 2007. The greater emphasis on rules-based regulation in the U.S. after 2008 is compared with the continued reliance primarily on principles-based regulation in the U.K. This difference, however, is not what will determine future outcomes. Rather, the main finding is that future compliance with safety and soundness requirements will depend on a regulatory policy and enforcement record that will alter the industry’s past conclusion that evasion, or even noncompliance, with legal requirements is a reasonable business decision based on cost-benefit evaluations. In light of that finding, the U.K.’s new enforcement policy and record is far more likely to lead to compliance than the light-touch enforcement policy and record that has continued in the U.S.
December 8, 2011
Dealing With Prepayment Penalties in Residential Mortgages
The Chicago Tribune lays out a creative way of dealing with a prepayment penalty:
I was at the closing table for my condo purchase only to discover that there was a penalty for early payoff. I called the bank immediately and they told me to "take it or leave it."
A great idea came immediately in my mind, and I went through with the closing. Soon, I received the money I expected and wanted to pay off the mortgage. The bank explained to me that a percentage of the payoff amount is calculated as a penalty. I sent them a payment for $5 less than the payoff amount.
After I made sure that my payment went through, I requested the payoff amount and the penalty. The penalty was of course calculated on the remaining amount of $5.
Ross & Yan on Property Tax & the Millage Rate
Justin Ross (Indiana - Public Affairs) & Wenli Yan (Kentucky - Public Policy) have posted Fiscal Illusion from Property Reassessment? An Empirical Test of the Residual View on SSRN. Here's the abstract:
The textbook view of the real property tax is that the millage rate is simply a residual, determined by dividing the revenue to be raised from property by the taxable base of assessed values. In such a case, changes in assessed values are neutral with respect to property tax revenue as it can be offset or adjusted by changing the millage rate, and reappraisals of property assessments simply serve the purpose of maintaining horizontal equity across individual households. Critics of this view claim that policy makers do not fully revise the millage rate in response to changing assessed values, allowing them to effectively raise revenue without raising tax rates. Using data from Virginia cities and counties between 2000 and 2008, this paper estimates the response of levy growth rates to assessed value growth. Unlike the previous literature testing these competing claims, this paper is able to disentangle assessed value growth from other forms of economic growth, including the market values of property. Our findings suggest that mass reappraisals per se provide some cover for politicians to raise levy growth rates, but the growth in aggregate taxable assessed values is largely irrelevant.
December 7, 2011
The Economist's Advent Calendar
I started reading The Economist in high school -- it made me sound really smart when I cited it in speech competitions. I've been a subscriber for a while, and while I love the print magazine, the iPad version is even better. (It is an expensive magazine, but they have good deals for academics.) Anyway, The Economist has begun an Advent Calendar feature, in which it unveils an interesting chart or graph each day until Christmas. Seven are revealed already. Check it out.
My favorite so far is the map of northern India and Pakistan which shows all of the border disputes between India, Pakistan, and China (via Tibet). An interesting story and graphic about the lingering effects of arbitrary, colonial borders.
Map of the Day
This is a little dated, but the size of each state is proportional to the number of times it's mentioned in country music lyrics.
Renuart on Property Title Trouble in Non-Judicial Foreclosure States: The Ibanez Time Bomb?
Elizabeth Renuart (Albany) has posted Property Title Trouble in Non-Judicial Foreclosure States: The Ibanez Time Bomb? on SSRN:
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.
December 6, 2011
Can China Manage Its Bubble Better?
Can China manage it's real estate bubble better than the United States managed its during the mid-aughts (2002-2007)? Well, I suppose it can't do much worse, but regulators in China are finding the process of dampening the rise in housing prices while maintaining economic growth as difficult as ever.
Speculation fueled by rising housing prices lead to over-building, and now the inexorable law of supply and demand is taking its toll. That is particulalrly true in places like Kangbashi, a city built for a about a million residents that sits mostly empty. To curb speculation, China has raised the cost of borrowing, but that adds to the downward pressure on housing prices that were already under pressure from over-supply. That, in turn, threatens both economic growth and, potentially, the government itself:
"[D]eflating the property bubble is a tricky gamble for the communist leadership given its reliance on rising living standards for its claim to power. Homeowners whose life savings are in property are seeing the gains they once took for granted evaporate as developers are offering steep discounts on new apartments."
In the United States, we certainly failed to find a decent balance between deflating a speculative housing bubble and maintaining economic growth. The result has been years of economic pain for the vast majority of the people, and untold riches for a few. Can China avoid the same fate?
Mark A. Edwards
Building Codes v. Occupy D.C.
The Atlantic outlines the property dispute underlying the recent clash between the D.C. protesters and the police:
[O]ver the weekend . . . local occupiers decided to up the ante and their investment in the makeshift city by building a fairly substantial structure. The “Peoples’ Pentagon,” they called it: a 17-foot tall barn framed in 2-by-4s that was optimistically intended to house meetings and insulate cold protesters through the winter months. . . . But here's the problem with protest architecture: Somewhere in between a temporary tent city and an actual building (requiring volunteer architects) lies a building code that applies to the entire city. And hard as they tried, D.C.’s occupiers, like so many do-it-yourself home improvers before them, ran right up against it.
The Number One Sign Your Land Use Controls Might be Too Restrictive. . .
. . . landlords can get away with charging a $40 application fee to anyone interested in renting an apartment. In San Francisco, a very tight rental market has allowed landlords to milk thousands of dollars from desperate prospective tenants:
At a “nice” $3,500-per-month loft in the Mission, “80 people showed up for the open house,” said Ms. Lamas, 23, who recently began working at a tech company in SoMa. “And the landlord said to me that he’d gotten 250 applications.” The cost of applying was $40, so if the landlord wasn’t exaggerating, he grossed $10,000 in application fees.
Reiss Reviews Ed Glaeser's Triumph of the City
David Reiss (Brooklyn) has posted Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (Environment & Planning) on SSRN. Here's the abstract:
It is always a bit unnerving to read someone else’s love letters, but even more so, when you have the same object of desire. Edward Glaeser’s TRIUMPH OF THE CITY is a love letter to cities and to New York City in particular. Glaeser provides a theoertical framework of the city, arguing that “Cities are the absence of physical space between people and companies. They are proximity, density, closeness.”
Glaeser prescribes three simple rules to protect the vitality of the urban environment: First, cities should replace the current lengthy and uncertain permitting process with a simple system of fees. Second, historic preservation should be limited and well defined. Finally, individual neighborhoods should have some clearly delineated power to protect their special character.
While Glaeser does not fully justify his set of rules, he does provide a thought-provoking discussion of the consequences of not following them. If you were to take nothing else from TRIUMPH OF THE CITY, you should attend to its cri de coeur: “the real city is made of flesh, not concrete.” But, notwithstanding its limitations, the book offers much, much more than that. It challenges broadly held beliefs and presents a theory of the city that helps to evaluate urban policy proposals with a clear eye.
December 5, 2011
Tom Merrill Previews the Supreme Court's Newest Property Case
Tom Merrill previews Wednesday's oral argument in PPL Montana, LLC v. Montana, one of the few property-related cases in the Supreme Court's docket:
The case is one for history buffs. The question is whether the state of Montana holds title to portions of three riverbeds in the state. The parties agree that the relevant legal test is historical: were the river segments in question part of a waterway that was “navigable in fact” when Montana became a state in 1889? Prominent among the many bits of historical evidence cited are the journals of Meriwether Lewis and William Clark, who explored the rivers in 1805 on their famous expedition.
The New York Times is On Fire: A Treasure Trove of Oil & Gas Leases
The New York Times is running a really killer series of articles on the "risks of natural gas drilling and efforts to regulate a growing industry." In the last few days the paper has posted an article on the perils of drilling that interviews landowners who have had second thoughts about the leases they signed.
The paper has also published a brief "Layman's Guide to Oil & Gas Leases" that lays out some key clauses that landowners have come to regret.
Finally, the Times has just put online thousands of oil and gas leases and related documents that it obtained through open records requests. Over 100,000 of the documents in the archive are from Tarrant County, Tex., roughly 3,200 are from New York, and the remainder are from states including Maryland, Ohio, Pennsylvania and West Virginia. See here for the archive. You can search the documents by clause, state, company, or year.
Wolf on The Supreme Court & the Environment
Michael Wolf (Florida) has posted The Supreme Court and the Environment: The Reluctant Protector (book chapter) on SSRN. Here's the abstract:
This document contains the Introduction and Contents for The Supreme Court and the Environment: The Reluctant Protector (CQ Press/Sage 2012). When one views the body of modern environmental law — the decisions and the other key documents — the picture that emerges is not one of Supreme Court dominance. In this legal drama, the justices have most often played supporting roles. While we can find the occasional, memorable soliloquy in a Supreme Court majority, concurring, or dissenting opinion, the leading men and women are more likely found in Congress, administrative agencies, state and local legislatures, nongovernmental organizations, private industry, and state and lower federal courts.
What one learns from studying the Supreme Court’s environmental law output is that the justices for the most part seem more concerned about more general issues of deference to administrative agencies, the rules of statutory interpretation, the role of legislative history, the requisites for standing, and the nature of the Takings Clause than the narrow issues of entitlement to a clean environment, the notion of an environmental ethic that underlies written statutes and regulations, and concerns about ecological diversity and other environmental values. When we widen the lens, however, and focus on the other documents that make up essential parts of the story of the Supreme Court and the environment — complaints by litigants, briefs by parties and by friends of the court, oral argument transcripts, the occasional stirring dissent, lower court decisions, presidential signing statements and press conference transcripts, media reports and editorials, and legislative responses to high court decisions — we discover what is often missing in the body of Supreme Court decisions.