PropertyProf Blog

Editor: Stephen Clowney
Univ. of Kentucky College of Law

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Tuesday, June 7, 2011

Homeowner Forecloses on Bank of America Branch

Revenge!

Five months ago, Bank of America filed foreclosure papers on the home of Maurenn Nyergers.  The trouble for Bank of America is that Nyergers never had a mortgage - she paid cash for her house. 

The case eventually went to court and Nyergers was able to prove she didn't owe Bank of America a dime. In fact, the judge ordered Bank of America to pay Nyergers' legal fees.

But then, Nyergers said she waited more than five months for a check. So the family's lawyer, Todd Allen, moved to seize the bank branch's assets.  Allen instructed sheriff's deputies and movers to remove desks, computers, copiers, filing cabinets and any cash in the teller's drawers.

According to sources, bank employees were locked out of the branch and the bank's manager appeared "visibly shaken" and "bewildered."  Yet, within the hour, a fairy tale ending;  The bank manager handed over a check to the lawyer for the legal fees.

Steve Clowney

June 7, 2011 in Home and Housing, Mortgage Crisis | Permalink | Comments (1) | TrackBack (0)

Thursday, June 2, 2011

Is Buying Really for Chumps?

Slate argues that, "the American economy is making a significant shift from buying to renting, and that may ultimately be good news." More specifically, the piece makes the case that:

Contrary to the housing-bubble dogma that a mortgaged apartment or house provides a pathway straight to the American Dream—and contrary to the tax code, which encourages buyers and discourages renters with a huge break for mortgage interest—renting is better than owning for many Americans. Indeed, dozens of recent studies have shown that, excepting the go-go bubble years, houses tend not to make very good investments at all: A prospective homebuyer would have made more money taking her down payment, parking it in inflation-adjusted Treasury bonds, and renting.

This is all well and good (and true), but the author ignores a lot of the other, non-economic benefits of homeownership.  First, there's the security of knowing that, as long as you make the payment, no one can take the place away from you.  The landlord can't turn your dwelling into condos at the end of the year.  Second, there are real autonomy benefits to home ownership.  You have the freedom (and incentive) to install expensive window treatments, granite countertops, and the hot tub of your dreams.  Finally, other than wearing sweater-vests, there's just nothing else in our national culture that signals a person is mature, and trustworthy, and respectable like owning a home. 

A house may not be a good investment, but it is a terrific consumption good.

Steve Clowney

June 2, 2011 in Home and Housing | Permalink | Comments (5) | TrackBack (0)

Tuesday, May 31, 2011

Reiss on the Goals of Federal Housing Policy

Reiss_david David Reiss (Brooklyn) has posted Foundations of Federal Housing Policy (book chapter) on SSRN.  Here's the abstract:

Federal housing policy is heavily funded and made up of a morass of programs. This book chapter provides a taxonomy of goals for housing policy. The chapter first asks what the aim of housing policy is. In other words, what can a well-designed and executed housing policy achieve? The answer to this question is not at all clear-cut. Some argue that the aim of housing policy is to allow all Americans to live in safe, well-maintained and affordable housing. Others argue for a more modest aim – achieving an income transfer to low- and moderate-income families that mandates that the income transferred is consumed in increased housing. And yet others argue that the main aim is to create a nation of homeowner-citizens, a goal which hearkens back to Jefferson’s idealized “yeoman farmer” and continues through to George W. Bush’s "ownership society."

Beginning with these possibilities, I identify and categorize various "principles" of American housing policy. This is an important exercise because 80 plus years of housing policy; hundreds of billions of dollars; and literally hundreds of different housing programs have all conspired to confuse the essential aims of American housing policy. This chapter seeks to clarify debates surrounding American housing policy as the Obama Administration puts its own stamp on this field.

Steve Clowney

May 31, 2011 in Home and Housing, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, May 19, 2011

Will Mortgage Scammers Never Cease

One of the eye-opening aspects of blogging here is this: often, if one of us puts up a post that contains the word "mortgage," we get spam in the comments box.  I would not be in the least surprised to find a comment on this post tomorrow that reads something like this:

This is a very interesting discussion of will mortgage scammers never cease.  I like to read about will mortgage scammers never cease.  Will mortgage scammers never cease is very important.

Signed,

Refi-now [at] lowestrates [dot] com

Since these usually come in response to a post about the latest mortgage industry outrage, it (frankly) pisses me off.

And just tonight, during dinner, I got a call from someone in Newport, CA, claiming to be working for Fannie Mae.  He told me my mortgage had "crossed his desk" and he wanted me to know, as a public service, that I could get a much lower rate, and he was prepared to tell me how.  I told him . . . well, I suppose this is a family blog, but I told him that I did not think highly of him.

I was naive enough to think that the mortgage crisis would have put, if not an end, at least dampener on this type of despicable activity.  This is exactly how so many people's lives were ruined, and exactly why the mortgage industry became such a chaotic, undisciplined, unethical nightmare that lenders can't even produce the note for mortgage loans on which they intend to foreclose. 

But if it wasn't apparent before, it should be apparent now that the mortgage crisis -- that is, the crisis of the mortgage industry -- is in the past.  Its particpants either walked away before the scam collapsed, or got bailed out if they were left holding the cards.   

Now they're back in action.  Want proof?  The front page of the on-line version of today's New York Times has an ad for "Orange Home Loans As Low as 3.05% APR."  Click on the link, and you get an offer for a 5 year fixed rate mortgage loan at 2.99% if you can put 20% down, but with monthly payments set as if the loan were a 30 year fixed rate.  In other words, when 5 years have gone, and you need to re-finance, you'll have built up no new equity in the home because you've been paying as if you had 30 years to pay it off, not 5.  You'll essentially have to purchase the home again, at a much higher rate.  And this isn't some fly-by-night company.  At least they require 20% down.

So the crisis of the mortgage industry is over.  Instead, what we have now is a foreclosure crisis.  A crisis that is rendering families homeless, destroying equity in homes, and in some places (here's looking at you, Florida) undermining the rule of law.

Soon we'll have a restitution crisis. 

If we get any spam in response to this post, I'll post it as an addendum here.

Mark A. Edwards

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May 19, 2011 in Home and Housing, Mortgage Crisis | Permalink | Comments (1) | TrackBack (0)

Mayer et al. on Mortgage Modification and Strategic Behavior

Christopher J. Mayer (Columbia Business), Edward R. Morrison (Columbia Law), Tomasz Piskorski (Columbia Business) and Arpit Gupta (Columbia Business) have posted Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide on SSRN.  Here's the abstract:

We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers with subprime mortgages throughout the country. Using a difference-in-difference framework, we find that Countrywide's relative delinquency rate increased thirteen percent per month immediately after the program's announcement. The borrowers whose estimated default rates increased the most in response to the program were those who appear to have been the least likely to default otherwise, including those with substantial liquidity available through credit cards and relatively low combined loan-to-value ratios. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs.

Steve Clowney

 

May 19, 2011 in Home and Housing, Mortgage Crisis, Real Estate Finance, Real Estate Transactions | Permalink | Comments (0) | TrackBack (0)

Monday, May 16, 2011

The Happiness of Staying in Place

As someone with a strong sense of place (I love love love my hometown) I was happy to see this article in the New York Times.  Constance Rosenblum discusses the joys (and some of the frustrations) of staying put in one home and one city for decades. 

People stay in one place for many reasons. Often the explanation is financial. In a city of ever-pricier housing, giving up even the tiniest rent-stabilized space can seem insane. If a personal or professional life doesn’t change much, there may be no incentive to move, and even if a life evolves, a space may be elastic enough to accommodate shifting needs. Sometimes it’s simply easier to stay than to go.

Steve Clowney

May 16, 2011 in Home and Housing | Permalink | Comments (0) | TrackBack (0)

Sunday, May 15, 2011

Washington Post Publishes Investigation of HUD, and it's not pretty

The Washington Post today published what appears to be the first in a series of investigative reports on wasteful spending by HUD, and the consequences of that waste for the poor.  According to the Post, it "analyzed a database of 5,100 open construction and renovation projects funded at $50,000 or more under the U.S Department and Housing and Urban Development’s HOME program."  It looked for projects that were:

launched more than five years ago that are still incomplete, projects that had not drawn money against their HUD accounts in at least 18 months or projects with other verified delays.

Overall, the newspaper identified an estimated 700 projects that were awarded $400 million; nearly 450 were launched in 2006 or earlier. In some cases, construction was completed, but the units are sitting vacant because housing agencies have not sold or leased them to a low-income family.

The Post also identified nearly 600 other projects that have never drawn any money despite being earmarked for a year or more, leaving $250 million languishing. HUD has begun canceling those projects.

Given that Congress is looking for areas to budget-cut, I suspect this series could be a game-changer for HUD.  That's unfortunate, because the need for affordable housing in the United States is enormous.  No doubt there is waste at HUD.  But I suspect that the committed and well-intentioned people at HUD are trapped by in a downward spiral: they aren't given enough resources to adequately oversee the projects they fund; with inadequate oversight, some of the projects they fund turn wasteful; when the waste is discovered, their resources are cut. 

The Post also has an interactive map of projects that are wasteful under its criteria.

It's investigative reporter, Debbie Cenziper, will answer questions from readers during a live chat at 1 p.m. Eastern, Monday May 16th.  You can post questions now.

It's well worth your time exploring the series.

Mark A. Edwards

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May 15, 2011 in Home and Housing | Permalink | Comments (1) | TrackBack (0)

Wednesday, April 27, 2011

Hills and Schleicher on Zoning & the Supply of Land for Housing

Rick Hills (NYU) and David Schleicher (George Mason) have posted Balancing the 'Zoning Budget' (Case Western Law Review) on SSRN.  Here's the abstract:

The politics of urban land use frustrate even the best intentions. A number of cities have made strong political commitments to increasing their local housing supply in the face of a crisis of affordability and availability in urban housing. However, their decisions to engage in “up-zoning,” or increases in the areas in which new housing can be built, are often offset by even more “down-zoning” or laws that decrease the ability of residents in a designated area to build new housing as-of-right. The result is that housing availability does not increase by anywhere near the promises of elected officials.

In this essay, we argue that the difficulty cities face in increasing local housing supply is a result of the seriatim nature of local land use decisions. Because each down-zoning decision has only a small effect on the housing supply, citywide forces spend little political capital fighting them, leaving the field to neighborhood groups who care deeply. Further, because down-zoning decisions are made in advance of any proposed new development, the most active interest group in favor of new housing – developers – takes a pass on lobbying. The result is an uneven playing field in favor of down-zoning.

Drawing on examples of “extra-congressional procedure” like federal base closing commissions and the Reciprocal Trade Act of 1933, we argue that local governments can solve this problem by changing the procedure by which they consider zoning decisions. Specifically, they should pass laws that require the city to create a local “zoning budget” each year. All deviations downward from planned growth in housing supply expressed in the budget should have to be offset by corresponding increases elsewhere in buildable as-of-right land. This would reduce the degree to which universal logrolling coalitions can form among anti-development neighborhood groups and would create incentives for pro-development forces to lobby against down-zonings in which they currently have little interest. The result should be housing policy that more closely tracks local preferences on housing development.

Steve Clowney

April 27, 2011 in Home and Housing, Land Use, Law Reform, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 26, 2011

From the Department of Disastrous Timing . . . Housing Counseling Funds Eliminated

Funding for HUD's housing counseling program has been eliminated.  Not to worry: not many people need housing counseling these days.

The counseling program cost $88M, or approximately 1.25 C-130J long-range military transport planes. 

Also from the same Department: Law Professor's laptop goes belly up during finals week; dog's leg is paralyzed, wife's back goes out.  I apologize for the lack of posts lately, but it''s been a wild two weeks.

Mark A. Edwards

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April 26, 2011 in Home and Housing, Mortgage Crisis | Permalink | Comments (0) | TrackBack (0)

Thursday, April 21, 2011

A New Urbanist Call to Arms

New Urbanist heavyweight, Andres Duany, has come out swinging in the recent issue of Metropolis Magazine.  Duany has penned a pretty stirring defense of New Urbanism's accomplishments, and makes time to attack the "postmodernists," "architecture students from elite schools," and members of the "avant-garde," that have poo-pooed the movement.

The New Urbanism is in reality an expanding web of ideas, techniques, projects, and people. The Congress for the New Urbanism (CNU) is an institution chartered 18 years ago with a budget, a board, and a staff. . . .New Urbanists wrote HUD’s HOPE VI standards and are thereby responsible for about 111,000 new and renovated units of affordable housing—virtually the entire supply of the last 15 years, with a good proportion designed by CNU members. . . . A diverse array of techniques has been rescued from oblivion and tested in hundreds of built projects. New Urbanist architecture’s visible “nostalgia” is easily dismissed by critics, but its power is really in software and other methods . . .

Steve Clowney

April 21, 2011 in Articles, Home and Housing, Land Use | Permalink | Comments (1) | TrackBack (0)

Friday, April 8, 2011

Renting While Deaf

This is troubling:

In a year-long test conducted by the Fair Housing Partnership of Greater Pittsburgh, researchers found 28 percent of landlords contacted by deaf people either hung up the phone, gave false information or used some other illegal means to deny the deaf person a place to live.

Test reviewers found 11 violations were so severe they filed complaints against the landlords with the U.S. Department of Housing and Urban Development, and the Pennsylvania Human Relations Commission. Seven of those cases have been settled and those landlords have undergone training in fair housing law. The other cases are pending.

Steve Clowney

April 8, 2011 in Home and Housing, Landlord-Tenant | Permalink | Comments (0) | TrackBack (0)

America's Most Segregated Cities

The Huffington Post has a slideshow about the most segregated places in the country. 

Using 2010 Census data, professors John Logan of Brown University and Brian Stults of Florida State examined the racial make-up of America's cities. The researchers found that progress toward integration has been uneven. In some large metro areas integration has improved dramatically; Kansas City experienced a 7.4 percent decrease in residential segregation over the last decade.  In contrast, New York declined only 1.7 percent, and in Miami segregation actually got worse.

Steve Clowney

April 8, 2011 in Home and Housing | Permalink | Comments (0) | TrackBack (0)

Thursday, March 31, 2011

Confessions of a Black Gentrifier

Shani Hilton has a piece in the Washington City Paper that's generated a lot of discussion in blog-world.  She highlights how her experience as a black gentrifier both overlaps with and remains distinct from the experience of white newcomers:

Crack cocaine hit D.C. and many black people with money—like most people with money would—headed to the suburbs. Those who couldn’t leave, and those who stayed to fight, had a ravaged city to contend with. This is the story we know.

But now, living in the city is cool again, thanks in no small part to development incentivized by government investment. And because we live in a “nation of cowards” (as U.S. Attorney General Eric Holder put it) where perhaps the only thing harder to talk about than race is class, it’s unsurprising that worries about gentrification boil down to white versus black, instead of educated and privileged versus uneducated and underserved.

That’s not to say that what we talk about when we talk about gentrification has nothing to do with race. The opposite is clearly true. White people don’t just “happen” to be better off, in general, than blacks. There’s systemic injustice that’s obviously based in racism. But instead of using that knowledge to spark a discussion about larger societal issues, there’s just pearl-clutching aplenty about the color of the new faces in the neighborhood.

Steve Clowney

March 31, 2011 in Home and Housing | Permalink | Comments (1) | TrackBack (0)

Wednesday, March 30, 2011

Iglesias on the FHA and Private Residential Occupancy Standards

Tim Iglesias (U. San Francisco) has posted Moving Beyond the Two-Person-Per-Bedroom: Revitalizing Application of the Federal Fair Housing Act to Private Residential Occupancy Standards on SSRN.  Here's the abstract:

New empirical evidence demonstrates that the common residential occupancy standard of two-persons-per-bedroom substantially limits the housing choices of many thousands of families, especially Latinos, Asians and extended families. The federal Fair Housing Act makes overly restrictive policies illegal, but the enforcement practices of the U.S. Department of Housing and Urban Development (HUD) have enabled the two-persons-per-bedroom standard to become de facto law. This article urges HUD to use its regulatory authority to remedy the situation and offers several solutions. And, if HUD fails to act, it encourages private plaintiffs to challenge the two-persons-per-bedroom standard and provides guidance to courts in deciding these cases.

Ben Barros

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March 30, 2011 in Home and Housing, Landlord-Tenant, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, March 17, 2011

Robust Housing Markets

Tim Zinnecker, blogging at the Faculty Lounge, has drawn attention to Builder Online's ranking of the 20 healthiest housing markets in the country.  Here's the top five:

1.  Raleigh - (NC)

2.  Austin - (TX)

3.  Durham - (NC)

4.  Huntsville - (Alabama)

5.  Gulfport - (Mississippi)

Steve Clowney

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March 17, 2011 in Home and Housing | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 16, 2011

Honolulu Moves the Homeless

Honolulu's stuggle to balance the needs of its homeless population against the needs of its tourist economy has drawn national attention again.  The Hawaii Community Development Authority has given the 100 homeless residents of Kakaako until 1 pm today to dismantle their tent city.  According to the New York Times:

Neil J. Donovan, the executive director of the National Coalition for the Homeless, said the state was one of many trying to deal with the homeless through ordinances, like the one barring tents, rather than programs to create housing. “That’s just such a short-sighted approach,” Mr. Donovan said. “It’s all about a lack of affordable housing.” In 2009, the coalition named Honolulu the eighth meanest city in the country in its dealing with the homeless. Still, Mr. Donovan said Hawaii’s situation was particularly challenging: on an island with limited land, escalating property values have made affordable housing scarce.

I do think that Honolulu deserves some credit for thinking creatively about this problem.  For example, the city has been using donated tour buses as transitional housing for homeless families.  The tour buses have fewer rules than traditional shelters, yet still provide many of the things that the homeless really need - shelters, showers, and a secure place to keep their stuff.

Homeless 'Tour Buses' House Families In Kakaako - Video - KITV Honolulu.

Steve Clowney

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March 16, 2011 in Home and Housing | Permalink | Comments (2) | TrackBack (0)

Tuesday, March 8, 2011

Hundreds of Foreclosures Halted in Oregon

Perhaps -- perhaps -- the tide is finally turning in the foreclosure crisis: courts are actively preventing unlawful foreclosures (Florida excepted).  I think that's a very, very good thing, because (1) I have a soft spot for the rule of law and (2) most foreclosures serve absolutely no one's interest except the mortgage servicer's, who collects fees for foreclosing.  The borrower is worse off, and both the lender and the investors in the securities backed by the loans are worse off in a stagnant re-sale market. 

But undoing the unlawful foreclosures that have already been completed will take many, many years.  Ibanez was likely the tip of a very large iceberg.  We had a mortgage crisis; we now have a foreclosure crisis; get ready for the restitution crisis.

From the Oregonian:

Since October, federal judges in five separate Oregon cases have halted foreclosures involving MERS, saying its participation caused lenders to violate the state's recording law. Three of those decisions came last month, the key one in U.S. Bankruptcy Court in Eugene.

Attorneys say it's not clear whether lenders in Oregon will simply start over or head to court to foreclose, steps that could prolong the crisis for months and drive up costs, attorneys say. Some suggest lenders might not have access to the documents they need to comply with state law.

"A lot of us are questioning whether there is a solution," said David Ambrose, a Portland attorney who represents lenders in mortgage transactions. "It's pretty amazing. There are a lot of unanswered questions."

MERS is listed as an agent for lenders on more than 60 million U.S. home loans, about half of all such loans.

Mark A. Edwards

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March 8, 2011 in Home and Housing, Mortgage Crisis | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 15, 2011

Foreclosure Crisis Update

The number of foreclosures in Minnesota quintupled between 2005 and 2008, according to this report  released by www.Housinglink.org.  And the trend is continuing upwards on an annual basis (although foreclosures dropped in the 4th quarter of 2010).

Foreclosures cause foreclosures, because each foreclosure drives down surrounding property values, pushing more borrowers underwater, and making it more difficult for them to re-finance as adjustable rates adjust and balloon payments become due.  Barring a moratorium, the crisis is unlikely to stop until either (1) some extrinsic factor causes economic growth or (2) homeowners who in the past five years secured short term adjustable rate or balloon payment loans with mortgages are mostly shaken out of the market through foreclosure. 

Assuming, of course -- and it's not a safe assumption by any means -- that lenders, if challenged, can produce the note and establish the right to foreclose.

Mark A. Edwards

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February 15, 2011 in Home and Housing, Mortgage Crisis | Permalink | Comments (0) | TrackBack (0)

Friday, February 11, 2011

White House Releases Plan for the Future of Housing Financing Market

The White House released a proposal today that would dramatically alter the long-term future of the American housing financing market, in ways that are almost as important and fundamental as the creation of the FNMA (later Fannie Mae) in 1938.

Starting in 1938, the U.S. government created and became the most important -- and often only -- player in the secondary mortgage market.  The FNMA bought loans and mortgages from banks, thereby allowing lenders to transfer the risk of default, but only if those loans met certain quality standards.  The secondary mortgage market was a great success and was responsible for much of the post-war housing boom in America.  The FNMA was semi-privatized in 1968, becoming Fannie Mae.  It helped created the mortgage-backed securities market, but when faced with competition from other players in the secondary mortgage market who captured market share by purchasing and securitizing loans that didn't meet its quality standards, Fannie Mae lowered its standards.  Because the appetite of investors for mortgage-backed securities was voracious, there was soon a race to the bottom through subprime lending.  Because Fannie Mae still had special privileges with regard to taxation and borrowing from the federal government, many investors assumed or gambled that Fannie Mae would be rescued by the federal government in the event it began to crash.  It did, and they were right.

The new plan's main objective is to release the United States from it's role as a de facto backstop for Fannie Mae, so that taxpayers aren't liable for reckless lending -- and presumably, so that reckless lending is less likely since liability for it will stay with lenders.  It offers 3 paths to that goal, essentially gradations of the same objective -- either (1) limiting its backstop role to certain targeted borrowers (such as lower income borrowers purchasing affordable housing), who meet the previously enforced Fannie Mae quality standards; (2) limiting its role to those borrowers during a time of crisis; or (3) eliminating its backstop role entirely. 

If implemented, any of these plans is likely to raise the cost of borrowing, since the risk of default must be priced into the private market system in ways that it may not have been previously.  I intend to write more about the plan's implications as I have more time to study it, but it is safe to say that what is envisioned is a reduced participatory role for the government in home lending; what isn't yet clear to me is whether the regulatory role of the government will increase or decrease correspondingly.

An apparently ideologically-distasteful truth in this mess is that the FNMA worked very well from 1938 to 1968.  But there is no stomach now for a government agency capturing an entire private market, even though it was able to impose quality standards that kept the market stable and functioning.  Since there is no stomach to dominate the market, the question is whether any participation is appropriate.  The plan's answer: perhaps, but only in the most limited sense.  My concern is that in the absence of significant particpation, quality assurance can only be achieved either by extensive oversight, or by rules that cause lenders to impose quality on themselves.

Given that, I still like my half-baked idea: lenders can make loans on whatever terms they choose, but they can't sell them all on the secondary market.  Instead some percentage -- let's say 20% -- must stay in-house in the portfolio of the originator.  But here's the key: that 20% is chosen randomly, by some computer sitting in a government agency that knows only the loan number.  It's lending Russian roulette.  Lenders can decide there own risk tolerance, but they can't fully escape it.  That should reduced the number of risky loans.

Meanwhile, the 80% of loans that enter the secondary market create capital for home lending.

Got another idea?  Speak up -- let's get in on the conversation about the future of housing finance in the United States.  If not us, who?

Mark A. Edwards

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February 11, 2011 in Home and Housing, Law Reform, Mortgage Crisis, Real Estate Finance, Real Estate Transactions | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 12, 2011

Kelly on Maryland's Affordable Housing Land Trust Act

James J. Kelly Jr. (Baltimore, soon to be at Notre Dame) has posted Maryland's Affordable Housing Land Trust Act on SSRN.

On May 20, 2010, Maryland’s governor, Martin O’Malley, signed the Affordable Housing Land Trust Act (AHLT Act) into law. Its enactment marked the culmination of six years of advocacy by the University of Baltimore Community Development Clinic and by the Maryland Asset Building and Community Development Network. The AHLT Act authorizes a new method of creating and sustaining permanently affordable homeownership. By using the affordable housing land trust agreements outlined in the legislation, Maryland nonprofits and governmental agencies may now enter into enforceable long-term agreements with publicly subsidized low- and moderate-income homeowners to ensure that their homes remain affordable to other income-qualified homebuyers in the future. With the development of this essential tool for the creation of permanently affordable homes, Maryland has addressed key obstacles to preserving the affordable housing gains it has made through its pioneering efforts in community-based nonprofit housing development and inclusionary zoning.

This article will explore the legal obstacles that advocates of permanently affordable homeownership in Maryland faced prior to this year’s statutory amendments, the dialogue that produced the final bill, and the way forward for permanently affordable housing in Maryland and elsewhere. Part I will give background about efforts to create permanently affordable homes and the difficulties presented by several legal doctrines common to many states and one unique to Maryland. Focusing on the legislation itself, Part II will describe the advocacy effort and stakeholder dialogue as well as the resulting bill that addressed a variety of concerns raised by the indefinite dedication of land to affordable homeownership. Part III will discuss how existing models of resale restrictions used by community land trust and inclusionary zoning programs can be adapted to meet the affordable housing land trust approach outlined in the statute. The article concludes with a discussion about the value of possible changes in the law of other states to support stewardship of housing affordability.

Ben Barros

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January 12, 2011 in Home and Housing, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)