Sunday, January 31, 2016
This past Friday I had the pleasure of participating in a symposium on Housing for Vulnerable Populations and the Middle Class: Revisiting Housing Rights and Policies in a Time of Expanding Crisis, hosted by the wonderful faculty and law review folks at the University of San Francisco School of Law (and a special hat tip to our very gracious host, Tim Iglesias). The timing of this gathering couldn’t have been better. 2015 was a busy year in the housing world as SCOTUS upheld the validity of the disparate impact theory under the Fair Housing Act and HUD issued its significantly updated regulations on the obligation to affirmatively further fair housing. Moreover, cities and local governments are being looked to more than ever to solve major and seemingly intractable issues around housing, spurring a host of new policies, programs, and initiatives. The impressive participants of the USF symposium (coming from practice, government, non-profit, and the academy) explored these and related issues, including potential solutions to pressing problems of housing. Here’s an overview of what the panelists had to say:
What’s the matter with housing?
Rachel Bratt (Harvard Joint Center) kicked off the day by giving an overview of the nation’s current housing woes. She noted that the increase in income inequality over the last 20 years, combined with disinvestment and misinvestment of public resources, has been at the core of the affordable housing issue. She also described how political spending has played a role in further entrenching existing housing interests (in 2015, $234M was spend on real estate/finance lobbying, second only to healthcare). Bratt also explained the uneven distribution of federal housing benefits to the wealthy and the continued persistence of concentrated racial segregation. Rosie Tighe (Cleveland State-Urban Affairs) followed by describing the particular housing problems facing so-called “shrinking cities” (those places in an intense population-decline). She noted that the issue for these cities has more to do with poor quality affordable housing, rather than quantity. Tighe described the failure of low-income housing tax credits to meet the needs of these locales, and discussed the need for more scattered-site developments in these areas, while recognizing the financing and property management challenges inherent in such developments. Peter Dreier (Occidental-Poli Sci) rounded-out the discussion by pointing out that the current political discussions around the presidential election have focused much on wages and other issues, but not at all on housing. He described some reasons for the absence of attention to this important area, and drew the strong connection between household over-all health and housing.
What’s the matter with our current solutions?
Chris Odinet (Southern) started the discussion by describing some current efforts by states and local governments to deal with the fall-out from the housing crisis and on-going issues of blight and abandoned property. He then explained a number of recent federal court cases and acts taken by the FHFA that have significantly frustrated these efforts and also seriously call into question the ability of states and local governments to be innovative in dealing with issues of housing when federal programs are involved. Michael Allen (Relman, Dane, & Colfax) discussed the Fair Housing Act and the new “affirmatively furthering” regulations. He went into depth on contemporary disagreements between affordable housing advocates (who support more affordable units) and fair housing groups (who support integrated housing, and advocated for a way to reconcile their views under the auspices of these new HUD regulations. John Infrana (Suffolk) followed by describing the types of housing in and changing household composition of many cities. Despite these changing demographics, however, housing has not kept pace. In connection with this, Infranca pointed to the many possibilities that micro-housing and accessory-dwelling units (ADU) provide in the way of meeting this need. He noted that ADUs allow for greater economic diversity and can better align with demographic trends, but noted current legal barriers to them such as occupancy requirements and zoning restrictions. Marcia Rosen and Jessica Cassella (both of the National Housing Law Project)) concluded the panel by discussing the current state of the public housing program in the U.S., noting that there are currently 1.2M units (and ever-declining). She described HUD’s recent efforts to give public housing authorities (PHAs) a financing tool to rehab and rebuild these properties through the Rental Assistance Demonstration Program (RAD). This program essentially allows PHAs to convert their public housing stock into section 8 funded housing, and to combine section 8 with tax credits and other forms of debt and equity financing to fund the project. Cassella stated that although the program has great potential in terms of revamping old and decaying public housing properties, there are draw-backs in the way of transparency and long-term funding stability.
What are some new solutions?
For this final panel, John Emmeus Davis (Burlington Community Development Associates) gave an overview of community land trusts (CLTs)—currently over 280 exist nationwide—and their successes across the country. He noted that these types of entities are usually most successful in communities where there would otherwise be no affordable housing available. He noted the ability of CLTs to empower communities, protect tenants, and provide street-level land reform. Andrea Boyack (Washburn) followed by noting the current lack of rental stock compared to the growing demand across the country. She pointed out that in 2015 over half of the population of the U.S. is renting, with an annual demand of 300K new rental units per year. She followed by describing some current statistical trends in American homeownership and posited a number of ways in which cities and states in particular can seek to achieve solutions to these major housing problems. Lastly, Lisa Alexander (Wisconsin) discussed the the human right to housing, not through the lens of federal law, but rather through the ways in which localities across the country are building legal structures that provide many of the rights associated with a right to housing. She noted that market participation has been important to this process, and she used the “tiny homes for the homeless” movement and community control of vacant land as examples.
You can watch each of these presentations by clicking on the youtube video above. Participants, moderators, and USF Dean John Trasviña (former HUD assistant secretary for fair housing) are pictured below.
January 31, 2016 in Conferences, Home and Housing, Land Use, Landlord-Tenant, Law Reform, Mortgage Crisis, Real Estate Finance, Real Estate Transactions, Recording and Title Issues, Takings | Permalink | Comments (0)
Friday, August 23, 2013
A poster on the DIRT listserv posted a question yesterday that I am going to give my Real Estate Transactions students this semester. This kind of proposal from a client is not unusual -- I had a longtime real estate developer client and friend propose that I help him with exactly the same scenario. We talked through a few possibilities, I explained all the legal risk to him, and he either dropped it or found another lawyer more eager to help him. Anyway, its (a) very real, (b) fraught with legal and ethical issues, and (c) therefore a great problem for real estate students to debate. Here is the unedited post to DIRT:
I have an opportunistic potential client (PC) with the following situation:
1) PC knows a seller (of improved property) who is willing to take $500k for his property.
2) PC knows a potential buyer who is willing to pay $850k for said property.
3) PC would like to somehow give the seller and buyer what they want while taking the extra $350k off of the potential buyer’s hands.
Wednesday, June 13, 2012
The Wall Street Journal has an interesting piece on the struggle of shopping center owners to backfill former Borders locations, a year after the book seller closed its doors. In Winston-Salem's Thruway Shopping Center, the Borders space is being retooled for Trader Joe's to open in August. While I miss having the book store, I welcome not having to drive to Charlotte for my favorite Trader Joe's items. But as chains which occupy large boxes fail, backfilling those spaces becomes more problematic, particularly at the healthy rents the former tenants paid. For example, the Circuit City location on Hanes Mall Boulevard remains empty, three years after it closed its doors.
Tuesday, May 8, 2012
Troy Rule (Missouri) passes on this info about the ABA Section of Real Property, Trust and Estate Law Fellows Program
The ABA Section of Real Property, Trust and Estate Law Fellows Program encourages the active involvement and participation of young lawyers in Section activities. The goal of the program is to give young lawyers an opportunity to become involved in the substantive work of the RPTE Section, while developing into future leaders.
As a RPTE Fellow, You Will:
• Be assigned to work with a substantive Committee Chair, who will serve as a mentor
and help expose you to all aspects of committee membership
• Get involved in a substantive project, which could include writing for a RPTE publication
• Become a Section liaison to the ABA Young Lawyers Division or your local bar association
• Become an active member of the Membership Committee
• Attend important Section leadership meetings
Click here for more information and to view the 2012 Fellows application
The Fellowship appointment is for two years. To be considered for selection, a person (1) must have practiced in the trusts and estates or real property area for at least one year (and be younger than 36 years of age or have been admitted to the bar less than 10 years), and (2) should have demonstrated leadership at the state or local bar level or in the Young Lawyers Division of the ABA. As part of the Section's commitment to diversity, three of the six Fellows selected will be minority applicants.
Fellows applications are due June 15, 2012.
According to Troy, you need not have “demonstrated leadership at the state or local bar level or in the Young Lawyer’s Division of the ABA” to get a fellowship. The fellowship provides $4,000 to cover expenses for four great trips to ABA conferences over a period of two years. E-mail Troy (email@example.com) if you have any questions about the fellowships.
Sadly, I aged out of this opportunity a while ago.
[Comments are held for approval, so there will be some delay in posting]
Wednesday, January 11, 2012
Via Joseph Singer, here's an interesting decision from the Michigan Supreme Court:
Contrary to the ruling of some other courts, the Michigan Supreme Court held that MERS (Mortgage Electronic Registration Systems) has standing to foreclose on properties for which it is the record holder of the mortgage even if it does not “own’ the note or the right to moneys under the note. The court held that because MERS is the “holder of the mortgage, MERS owned a security lien on the properties, the continued existence of which was contingent upon the satisfaction of the indebtedness.” The court concluded that the legislature would want the record mortgage holder to have the right to foreclose on the property. The case is Residential Funding Co. v. Saurman, 805 N.W.2d 183 (Mich. 2011).
Thursday, December 15, 2011
The LA Times reports that the number of Nevada properties that entered foreclosure fell by 75% in October, even as the rate climbed elsewhere in in the country.
That news, though, did not result from a reversal of fortune in the Nevada housing market. It was spawned by a new Nevada law that plays hardball with companies doing the foreclosing. Assembly Bill 284, which took effect in October, requires those foreclosing on a home to file an affidavit proving they have the right to bring the action — and it increases civil and criminal penalties for using fraudulent documents in a foreclosure.
Wednesday, November 30, 2011
Thanks to Alice Noble-Allgire for passing along this post from a real estate blog on the property themes in the movie Burlesque. Property saves the day!
[Comments are held for approval, so there will be some delay in posting]
Monday, November 21, 2011
Peter Swire (Ohio State) has posted What the Fair Credit Reporting Act Should Teach Us About Mortgage Servicing on SSRN. Here' the abstract:
The current housing crisis has revealed deep flaws in the way monthly mortgage payments by homeowners are handled by mortgage servicers – the companies that collect monthly mortgage payments from homeowners and forward the payments to investors in those mortgages. This article suggests that the structural flaws in mortgage servicing are directly analogous to the market failures that led to the creation of the Fair Credit Reporting Act of 1970 (FCRA). The FCRA thus serves as a significant model for possible reforms in mortgage servicing.
Friday, November 11, 2011
Roger Bernhardt (Golden Gate) has published a flurry of short pieces on Real Estate Transactions:
Monday, November 7, 2011
Robert Ellickson (Yale) has posted The Costs of Complex Land Titles: Two Examples from China on SSRN. Here's the abstract:
Chinese customs and law have traditionally prevented a land seller from conveying outright title to a buyer. The ancient custom of dian, which persisted until the 1949 Revolution, gave a land seller and his lineage an immutable option to buy back sold land at the original sale price. This little-analyzed custom discouraged soil conservation and land improvements, and, especially after 1600, contributed to China’s inability to keep pace with England.
After calamitous experiences with land collectivization between 1951 and 1981, China’s Communist government began to confer private land-use rights. But, instead of making outright sales, it chose to award contractual rights only for a fixed-term, for example, 50 years in the case of an industrial parcel. For the same reasons dian did, this policy threatens to impair China’s prospects of economic development.
Thursday, September 29, 2011
There have been reports for a year or more that the Obama Administration is considering selling surplus real estate assets (leases and fee simple interests) as part of an effort to ease the federal deficits. The New York Times reports today that this idea has garnered rare bipartisan support and may be building steam.
But a recent study by the GAO argues that GSA (the real estate arm of the federal government) has over-relied on leasing and that used owned real estate is a better strategy for the government than leasing.
I hate to criticize that rare policy issue that both parties have apparently agreed upon, but I have two issues with the administration's plan. First, in light of the GAO report, does it make sense to divest of owned real estate while GSA is still leasing? Perhaps GSA has reviewed all of the "surplus" real estate (such as Plum Island) and rejected it, but then again, perhaps not. Second, in a time when commercial real estate values are still significantly depressed, is it a good idea for the government to dump more inventory on the market?
Sunday, August 28, 2011
At the SEALS conference a few weeks ago, I was introduced to a great, free resource for law professors and law students: Practical Law (http://us.practicallaw.com). Designed as a paid, subscription service for law firms and libraries, those of us in law schools can get free access.
Click on a practice area of interest to access an organized list of practice notes, form documents, clauses, checklists, and articles. Materials about corporate & securities, employee benefits, finance, and labor & employment are well developed. Of interest to those of us who teach property and real estate courses is the “real estate” practice section. There are some good practice notes on commercial real estate, including workouts, REITs, mezzanine financing, and international real estate. The form documents (with notes) available to date mostly concern office leasing.
The real estate section is still under development, but this is a resource that I plan to keep an eye on as it becomes more robust.
Monday, August 15, 2011
Monday, August 8, 2011
According to the LA Times, an unusually large number of home purchase contracts are falling through. Lawrence Yun, chief economist of the National Association of Realtors, thinks that low-ball appraisals and tough mortgage underwriting are the main culprits. Interviews with realtors, however, suggest another cause:
Buyer confidence about the direction of the national economy has been badly rattled in the last six to eight weeks by the gridlock in Congress over raising the national debt ceiling and cutting the deficit. That is making buyers less willing to take a risk on a major purchase, brokers say. It's also making them pickier and more demanding when defects are found in home inspections and frequently is leading to contract cancellations for relatively minor reasons.
Monday, July 11, 2011
Andrey Pavlov (Simon Fraser) and Susan Wachter (Penn - Wharton) have posted REITS and Underlying Real Estate Markets: Is There a Link? on SSRN. Here's the abstract:
This paper utilizes the Carlson, Titman, and Tiu (2010) model of REIT returns to estimate the strength of the relationship between REIT and underlying real estate returns. Our work further offers an innovative method for computing the returns of the real estate properties underlying each REIT using the Moody’s/REAL commercial property price indices by region and property type. We find a statistically significant relationship between REIT and real estate returns only in the office sector. Other property types offer only very weak and insignificant relationships. This finding suggests that direct real estate investment or investment through the property price index derivatives cannot be replicated using REITs.
Friday, May 20, 2011
John Pottow (Michigan) has posted Ability to Pay on SSRN. Here's the abstract:
The landmark Dodd-Frank Act of 2010 transforms the landscape of consumer credit in the United States. Many of the changes have been high-profile and accordingly attracted considerable media and scholarly attention, most notably the establishment of the Consumer Financial Protection Bureau (CFPB). But when the dust settled, one profoundly transformative innovation that did not garner the same outrage as CFPA did get into the law: imposing upon lenders a duty to assure borrowers’ ability to repay. Ensuring a borrower’s ability to repay is not an entirely unprecedented legal concept, to be sure, but its wholesale embrace by Dodd-Frank represents a sea change in U.S. consumer credit market regulation. This article does three things regarding this new duty to assess a consumer’s ability to pay mortgage loans. First, it tracks the multifaceted pedigree of this requirement, looking at fledgling strands in U.S. consumer law as well as other areas such as securities law; it compares too its more robust embrace in foreign systems. Second, it offers conjecture regarding just how this broadly stated principle might be put into practice by the federal regulators. Finally, it provides a brief normative comment, siding with the supporters of this new obligation on lenders.
Thursday, May 19, 2011
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.
Thursday, May 12, 2011
Over at the Conglomerate, David Zaring is trying to get to the bottom of a mystery. Why are Real Estate Companies called organizations?
New York City alone has the Durst Organization, the Brodsky Organization, the Trump Organization, &c. Why are these called organizations? It's not that they aren't also limited liability companies as well. And it is the case that many non real estate firms will set up internal "real estate organizations" to manage their property. But my quick search on Westlaw and through the websites of these companies didn't reveal the reason for the fashion for the "organization" moniker. The question isn't easy to resolve via text searching ("organization" isn't very unique). So I thought I might crowd-source the question. Do our readers know the answer?
Monday, May 9, 2011
Friday, May 6, 2011
Brian Shannon (Texas Tech) has posted The Reach for Repose: Have the Texas Courts Gone Awry? (Texas Tech Law Journal) on SSRN. Here's the abstract:
What do lawsuits filed against building contractors or repairers, other construction professionals, and manufacturers or suppliers of products such as furnaces, elevators, garage door openers, underground storage tanks, and spray-on ceiling materials have in common? All of these actions, provided they have been initiated ten or more years after either the completion of the building project or the manufacture of the item in question, are potentially subject to a statute of repose enacted by the Texas Legislature in 1975. Although the language of this statute is couched in terms of providing repose protection to persons who construct or repair improvements to real property, Texas courts and federal courts applying Texas law have not limited the reach of the statute to cases involving construction professionals. Instead, the courts have greatly expanded the statute's range of applicability to cover off-site manufacturers of products that have become improvements to real property. In this regard, the courts are in error. With respect to persons other than construction professionals, the Texas courts have both misconstrued the statute of repose and virtually ignored the legislative history of the act. Accordingly, this article will examine the Texas statute of repose relating to persons who construct or repair improvements to real property in the context of both the decided cases and with regard to the intentions of the legislature in enacting the repose protections.