Monday, February 13, 2012
The following is a guest post from Rebecca Tushnet of Georgetown. Check out her impressive scholarly contributions here. Also, if you're interested in false advertising and other IP issues, then you really should follow her blog. Without further ado:
I recently started teaching the subprime mortgage crisis in my first-year Property class. We use Dukeminier et al., though I’ve supplemented with a bunch of other material, in part because the book came out in 2010. When I was preparing the syllabus, I’d planned to teach McGlawn v. Pennsylvania Human Relations Commission, 891 A.2d 757 (Commonwealth Ct. Penn. 2006), which I found out about in the excellent book Integrating Spaces: Property Law and Race. But then I saw that the most recent edition of the Dukeminier casebook had added a new section on subprime mortgages that contained Commonwealth v. Fremont, on which McGlawn relies for principles about what subprime loans were unfair, so—busy and trusting—I put Fremont on the syllabus instead.
Here’s the thing: McGlawn introduces students to a number of actual victims of predatory lending, including the financial and emotional losses they suffered, while Fremont simply recites the predatory features of the loans, making it harder to see why we should care. Then, in the questions following the case, the Dukeminier casebook asks why consumers took these terrible loans. It cites some law & economics scholarship and some behavioral economics, suggesting that the problem was excessive consumer optimism (as opposed to, in McGlawn, a fair amount of pure fraud as well as misunderstanding).
What the casebook doesn’t ask is why lenders made these terrible loans. The questions we ask influence the answers we get. It’s also notable that the casebook only asks about the consumers in a paragraph that suggests (contrary to all credible evidence) that the Community Reinvestment Act had some causative relationship to the subprime crisis.
The casebook additionally says in the same paragraph, “Because a large proportion of home mortgage loans are sold into the secondary mortgage market, most equitable defenses are unavailable to homeowners as a result of the holder-in-due-course doctrine.” Most students won’t really know what that means; I’ve found that they are disturbed enough by the concept of void versus voidable title—which shows up earlier in the course in the O’Keefe v. Snyder case. But it may be worth telling students that this statement—the foundation of securitization of mortgage loans—is not as certain as the casebook presents it. Among other things, if the note and mortgage were actually assigned in order to perform the foreclosure after the loan went into default (which wasn’t supposed to be the sequence but apparently often was), it’s not clear why the holder is a holder in due course with no notice of the problem with the underlying debt.
I don’t think Dukeminier et al. is an evil casebook, nor do I think that the authors consciously chose to strip out the homeowner-victims in order to reduce them to people who made bad bets and must inevitably suffer the consequences. (And many of the chain of title problems were just coming to light in 2010, which explains why they aren’t in the casebook.) But case selection and questions asked of students have powerful effects on what new lawyers think of as the baseline of the law, and this new section in the casebook is a good example.