Saturday, August 19, 2017

Zombies, Mortgages, and What New York State Is Doing About Them

(Photo Credit: Buffalo News)

Of the many ills that resulted from the 2008 financial crisis, none garnered such a fantastic moniker as did the “zombie mortgage crisis.” But despite its name, this isn’t an episode of The Walking Dead. Rather, the phrase refers to a practice by mortgage lenders (or, mortgage servicers to be more precise) whereby a notice of foreclosure would be given and the defaulted and distressed homeowner would typically move out in anticipation of a foreclosure sale. But then, the lender would decide not to go through with the foreclosure process after all.

Not finishing the process was typically due to the fact that the property was “underwater” (meaning that the net of the debt due on the mortgage loan and the value of the property subject to the mortgage was in the negative—the secured debt was greater than the value of the collateral, in commercial law terms). This meant that there was no chance the lender could recoup its losses at the sale, which typically resulted in the property becoming REO (owned by the lender itself). This might seem obvious, but lenders don’t like being property owners—they would rather get paid. One reason they really don’t like owning foreclosed property is because ownership comes with costs. For instance, the bank is going to have to pay any homeowners association dues that might be required (which failure to pay can result in a lien on the property). There could also be tort liabilities if someone is hurt on the premises. But the lender can avoid all of this (and did) by just not doing anything—leaving the house still titled in the name of the now-absent homeowner but also leaving the mortgage in place. Hence the name—the mortgage process is initiated, leading one (the homeowner) to believe that foreclosure will soon happen and the mortgage will be gone, only to have the mortgage linger on (potentially forever)--like a zombie. You get the gist...

If you want a great (or terrible, rather) story, then look no further than this excerpt from a piece by Andrea Boyack (Washburn) and Robert Berger (Kansas Bankruptcy Judge):

After receiving notice from JP Morgan Chase in 2008 that foreclosure was imminent, homeowner Joseph Keller vacated his home, moved to a new residence, and tried to pick up the pieces and start again. Two years after he had relocated, however, the county sued Keller because his house, “already picked clean by scavengers,” was in violation of the housing code. Upon returning to investigate, Keller found his former home “in [] shambles,” with “hanging gutters and collapsed garage.” Keller also discovered that he owed back taxes, sewer fees, as well as bills for municipal weed and waste removal. Furthermore, he remained personally liable on the Chase mortgage loan, the debt having grown from $62,000 to $84,000 because of two years of unpaid interest, penalties, and fees. Adding insult to injury, the Social Security Administration rejected his disability application because the vacant, crumbling home he still unwittingly owned was a valuable “asset.” Chase had dismissed the foreclosure judgment two months after Kelley had moved out, but somehow Kelley was never informed. (citations omitted).

And the zombie mortgage problem isn't just something that's bad for homeowners. Abandoned property of this kind has a huge impact that reaches far beyond lot lines. Stories abound of zombie mortgaged properties that fall into disrepair and become havens for crime and create public health concerns. This, in turn, has the effect of diminishing the property values of those parcels that are nearby—indeed, the whole community can sink with just a handful of scatter-site abandoned properties. And of course, where the problem is bad enough, local governments see a shrinking of property tax revenues as a result of the decline of neighborhoods where abandoned homes are located. Also, for those vacant properties in common interest communities (like a homeowners association or a condo association), the lender has no reason to pay the assessments (except for those few states which have adopted the limited super priority of the Uniform Common Interest Ownership Act). Whatever lien is imposed by the HOA for nonpayment will almost always be inferior to that of the lender's mortgage. Again, the mortgagee's interest is protected. Thus, those owners still left in the neighborhood must bear the burden of the unpaid assessments.

Naturally, social harms also follow the zombie mortgage practice. Consider, again, an excerpt from Boyack and Berger:

. . . [P]roperties subject to zombie mortgages are concentrated in low-income and minority communities. More than 57% of zombie properties are located in census tracts made up of households in the bottom 40% of income, compared to only 22.5% of zombie properties in communities where household income is in the top 40%. Statistically, if minority households compose at least 80% of a census tract, it is 18% more likely that a foreclosure in that community will end up a zombie mortgage compared with foreclosures commenced in other neighborhoods. (citations omitted).

So why is this important now, since the practice has obviously been going on for several years? Well, in the 2016 legislative session, the New York legislature passed a bill (effective December 2016) to try and address the zombie foreclosure problem. At the time the bill was passed, NY state officials estimated there were over 6,000 homes that were unoccupied and falling into disrepair.

So how does this law work? First, the legislation (known as New York’s 2016 Zombie Property and Foreclosure Prevention Act but more properly Part Q of Chapter 73 of the Laws of New York) has "mandatory" reporting requirements when it comes to informing the state about abandoned homes. Second, the law requires mortgage lenders (servicers to be precise) to maintain vacant and abandoned properties (something that previously was only required when the bank actually became the owner of the property). The trigger for the shift in the obligation to maintain the property comes when the lender has “a reasonable basis to  believe that the residential real property is vacant and abandoned . . . and is not otherwise restricted from accessing the property.” If the lender fails to maintain the property, the government can impose a civil penalty of $500 per violation, per day, per abandoned property.

For lenders, the law gives them an expedited foreclosure process if there is a good faith showing that the property has been abandoned. Importantly, the new act mandates that the foreclosing lender must proceed to the foreclosure sale within 90 days of obtaining a foreclosure judgment. If the lender itself purchases the property at the auction, then it must ensure that the home becomes reoccupied within 180 days of the date of acquisition. Lastly, the legislature gave the governor $100 million to be used to help low- to moderate-income individuals purchase and make repairs to these abandoned properties.

So now that we’re one year in (well, a little less), how is the law working? Evidently there are some practical/enforcement problems, as recently reported by the National Mortgage News and other outlets. First, reporting requirements (although mandatory) are not easy to enforce. The law leaves it up to lenders and local governments to report homes that are abandoned or vacant—which can be spotty and unreliable. Also, despite the penalities, the New York Department of Financial Services (the body that is not necessarily charged with enforcement of the law but that has taken up the mantle) reports that no penalties have been assessed since the law took effect. Although the NY deparment reports that banks and their servicers are broadly complying, state officials admit that they do not send inspectors to the properties to assess the situation themselves. And some local officials, like the mayor of Lackawanna, NY, says that not all banks are complying with the law. He noted this past May 2017 that "[t]his is bringing down our neighborhood, not just Lackawanna, not just Western New York but all of New York State by having banks being absent in their obligations in what they're supposed to be doing."

Also, unfortunately the abandoned home registry is not public. State officials say that doing so would make it a target for “squatters and criminal activity.” I’m a bit incredulous about that claim, since I can’t imagine many squatters and/or everyday criminals being sophisticated enough to go check out the Department of Financial Services’ website and find its registry database (or even know about it) and then go through the process of finding the ideal abandoned home for their purposes. Like the CFPB’s complaint database, making this registry public could help researchers and academics in empirically studying the zombie foreclosure issue more closely.

Lastly, NY state officials hope to help local governments build the capacity necessary to enforce this law themselves (an additional task that most municipalities will likely find difficult to pay for without funding from the state or another source).

Here at the #PropertyLawProfBlog, we’ll keep an eye on how this law continues to be rolled out in New York (as well as what other states might be doing to address the zombie foreclosure phenomenon). For now, over and out!

August 19, 2017 in Home and Housing, Mortgage Crisis, Real Estate Finance, Real Estate Transactions, Recording and Title Issues | Permalink | Comments (1)

Tuesday, September 13, 2016

Odinet on Virtual Property and Secured Credit

Odinet Photo (Jarreau)Chris Odinet (that's me!) (Southern) has posted BitProperty and Commercial Credit (Washington University Law Review) to SSRN. Here's the abstract:

In the past several years the growth of virtual property in today’s economy has been explosive. The everyday use of virtual assets ranging from Twitter and Facebook to YouTube and virtual world accounts is nearly absolute. Indeed, by one account Americans check social media over 17 times per day. Further, a growing number of savvy virtual entrepreneurs are reporting incomes in the six and seven figure range, derived solely from their online businesses. Nevertheless, although the commercial world has come to embrace these newfound markets, commercial law has done a poor job of keeping up. Scholars have argued that laws governing everything from taxation, to bankruptcy, to privacy rights have not kept pace with our ever-changing virtual world. And nowhere is this truer than in the law of secured credit. Doubtlessly virtual property has come to represent significant wealth and importance, yet its value as a source of leveraged capital remains, in large part, untapped. This unrealized potential is not without good reason; the law — specifically Article 9 of the UCC and the law of property more broadly — suffers from a number of deficiencies and anomalies that make the use of virtual property in secured credit transactions not only overly complex and expensive, but almost entirely untenable. This Article shines light on these shortcomings, and, in doing so, advances a number of guiding principles and specific legislative recommendations, all geared toward a reformation of the law of secured credit in virtual property.

September 13, 2016 in Articles, Intellectual Property, Law Reform, Personal Property, Property Theory, Recent Scholarship, Recording and Title Issues, Virtual Property | Permalink | Comments (0)

Friday, September 2, 2016

Illegal Property Tax Foreclosures in Detroit

Atuahene_Bernadette_portraitCheck out this really fascinating (and disturbing) article about research conducted by Bernadette Athene (Chicago-Kent, currently visiting at Chicago) on illegal property tax foreclosures in Detroit:

This week was the 11th anniversary of Hurricane Katrina.  Over the years, many have said that Detroit is experiencing a hurricane without water.

Like with Katrina, the property tax foreclosure crisis in Detroit has wiped out entire neighborhoods inhabited by poor and working-class black people. From 2011-15, the Wayne County treasurer foreclosed upon approximately one in four Detroit properties for nonpayment of property taxes.

In fact, Detroit has one of the highest number of property tax foreclosures any American city has had since the Great Depression. Most important, once foreclosed properties are vacated, they are often vandalized, burned down or stripped of all valuable materials, creating a flood of blighted properties that decimate communities by reducing property values, attracting crime and causing those who can to evacuate.

There is a debate about the origins of Detroit’s property tax foreclosure crisis.

Popular narratives have focused on a culture of lawlessness in which property owners have cheated the city by not paying their property taxes and then devising ways to avoid foreclosure.

Some have welcomed the record number of property tax foreclosures as a sign that Detroit, at long last, is establishing law and order. But, I recently co-authored a study titled “Stategraft” that demonstrates that Detroit’s unprecedented property tax foreclosure rate is indefensible because property tax assessments in Detroit are, in fact, illegal.  

Michigan’s  Constitution clearly decrees that a property’s assessed value cannot exceed 50% of its market value. In our study, we find that Detroit’s assessor is flagrantly violating this vital state constitutional provision. Consequently, contrary to popular narratives, it is the city that is stealing from Detroit property owners through illegal assessments and inflated property tax bills, and not the other way around. And while the city has reassessed properties during the last two years, those actions have not been enough to bring most assessments in line with the Michigan Constitution. 

To investigate whether property tax assessments in Detroit are illegal, we use citywide property sales and assessment data for 2009-15. As required by Michigan case law and statute, we included only arm’s length transactions in our analysis, and we find that, in 2009, 65.5% of the properties sold violated the state constitutional assessment limit.  In subsequent years the numbers were equally shocking: 2010 (84.7%), 2011 (54.6%), 2012 (71.4%), 2013 (78.2%), 2014 (83.2%), 2015 (64.7%).

The property tax assessments were not only above the legal limit, but they also exceeded it by a substantial sum. For instance, in 2010, assessments were, on average, 7.3 times higher than the legal limit. In 2015, assessments were, on average, 2.1 times higher than the legal limit.

In all years studied, the illegality was most pronounced for lower-valued properties. That is, the city is more likely to assess modest homes at illegal levels than it is more expensive homes, leaving the most vulnerable homeowners drowning in injustice. 

Detroit’s mayor, Mike Duggan — a former prosecutor — acknowledged that “for years, homes across the city have been over assessed,” and tried to remedy this in 2014 and 2015 by implementing assessment decreases for most of the city, ranging from 5% to 20%.

Our study shows that illegal property tax assessments nevertheless persist for lower-valued properties despite these reductions. For example, in 2015, properties with the lowest values were, on average, assessed at 4.8 times the legal limit, while properties with the highest values were, on average, legally assessed.

Both before and after Duggan’s assessment reductions, those who can afford only modest properties have been subject to the most severe illegality and forced to endure the consequences of Detroit’s broken levees.

In July, the American Civil Liberties Union of Michigan, the NAACP Legal Defense Fund and the law firm of Covington & Burling filed a class action  alleging that the unprecedented number of property tax foreclosures in Detroit is unlawful on several counts, including the fact that the property tax assessments systematically violate the state constitution and the Fair Housing Act. The findings of "Stategraft" strongly support this claim.

The end goal of the class action is to stop all property tax foreclosures that are based upon illegal assessments. As an interim measure, the legal team recently filed a motion for a preliminary injunction that would place a moratorium on property tax foreclosures of owner-occupied properties in Detroit and throughout Wayne County.

To be sure, by reducing city revenues, a moratorium would further wound a city that has been in economic decline for decades and is desperately trying to emerge from the shadow of the largest municipal bankruptcy in our nation’s history. But, just as we do not allow homeless people in desperate need to burglarize homes, we should not allow the City of Detroit to use unlawful assessments and inflated property tax bills to steal money from Detroit property owners. Additionally, the requested moratorium is narrowly tailored so that it protects only vulnerable homeowners and not investors. 

Given the mortgage foreclosure crisis, water shutoffs and historic bankruptcy, the people of Detroit have already had to weather several devastating storms. Now that they are facing a hurricane without water, the federal government cannot leave Detroiters stranded.

Attorney General Loretta Lynch must ensure that the Housing and Civil Enforcement Section of the Department of Justice opens an official investigation, which will supplement the ongoing class action and begin to quell the tides of inequity.

Bernadette Atuahene is a visiting professor at the University of Chicago Law School and a research professor at the American Bar Foundation.

September 2, 2016 in Articles, Home and Housing, Mortgage Crisis, Real Estate Transactions, Recent Scholarship, Recording and Title Issues, Takings | Permalink | Comments (0)

Wednesday, August 17, 2016

#LouisianaFlood: Property Law and Consumer Protection After a Natural Disaster

(Photo Credit: The Millennium Report)

As national news is just getting around to reporting, Baton Rouge and its surrounding areas recently experienced tremendous flooding. Large portions of southeast Louisiana were (and many remain) underwater. Our tax law friends over at the Surly SubGroup, specifically Phil Hackney (LSU), summarize the situation nicely:

The devastation stretches from around the Louisiana-Mississippi border all the way over to Lafayette -maybe 100 miles across. This story does a nice job explaining the weather phenomenon that caused this massive flood event. Neighborhoods that have never flooded before in our recorded history are under 4 -6 ft. of water, and some higher than that. Almost the entirety of certain cities are submerged. The last data I had for my area is that 20,000 were displaced and 10,000 in shelters. I expect that number to go up over the week. Even though it has stopped raining, the flood waters cannot drain because the rivers are too high and cannot take runnoff from tributaries.

For those who may find this helpful, this short post talks a little about the property law (specifically related to home mortgage obligations and homeowners’ insurance) that victims of natural disasters like the Louisiana flooding should keep in mind.


After a disaster like the flooding in Louisiana it is important to get in touch with your bank or mortgage servicer to obtain relief. The reason for this is because even if your property is destroyed and/or you can no longer live in the home, the mortgage debt does not go away. It is still owed even if the improvements on the real estate are not longer habitable. If contacted, however, sometimes the mortgage company will give you more time to pay your monthly note and even dispense with late fees or penalties. Also, if the home has been lost due to substantial or total destruction, you’ll want to talk to your mortgage servicer ASAP to prevent or postpone foreclosure on the property. For private loans (i.e., not government-backed) it will be up to the lender and you to work out those details. Be aware that even if the lender gives you a forbearance for a period of time, you will still have to make up those payments later.

For those loans that are FHA-backed, borrowers are sometimes eligible for resources that allow them to remain in the home. The FHA has a disaster relief policy pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act where, if (1) you or your family live in a federally-declared disaster area; (2) you are a household member of someone who is deceased, missing, or hurt because of the disaster; or (3) your ability to pay your mortgage is significantly impacted by the disaster, then your lender cannot foreclose on its mortgage for a 90-day period. The FHA also strongly advises its participating lenders to work with mortgagees who are affected by natural disasters (for example, by taking a deed in lieu of foreclosure if appropriate or allowing only partial payment for a period of time). This is why it’s so important that homeowners in these flooded areas contact their mortgage servicers and let them know that they qualify for FHA Disaster Relief. For additional help in this process, HUD has a counseling hotline to call at 1-800-569-4287 or you can contact HUD's National Servicing Center.


With regard to property insurance, dealing with your insurer can be a long and complicated process after a natural disaster. The important part is knowing what your declaration and your policy states, and whether flood insurance is included (i.e., for damage caused from rising waters). A general homeowner’s policy only covers damage caused by wind, rain, hail etc. Flood damage is insured separately. The exclusions portion of the policy will help in making this determination.

When it comes to actually getting money for lost or damaged property, different insurance policies take different approaches. You can either obtain the replacement cost value of the property (which means the insurance company will give you funds necessary to substitute the damaged or lost property with comparable property) or actual cash value (which is where you receive the cash value of the property that was lost or damaged, minus depreciation over time). The insurance policy will reveal to which you are entitled.

In the case of personal property losses specifically, this is generally referred to as the insurance of “contents” of the home. Documenting these losses are particularly important (so don’t start throwing things away too quickly). Keeping receipts are also critical to submitting a successful claim.

Another important aspect of property insurance is the fact that you are not the only person insured. Your mortgage bank is also listed as an insured on your policy, which means that when the insurance company send the check the bank will also be listed as a payee. Usually your residential mortgage contract requires that you send the check to the bank and then, through an escrow and release process, the funds will be distributed to you to pay contractors to repair the home in tranches. This means that you and your mortgage bank will have to work together to get the repairs completed and your contractors paid. Another option can be to actually pay off the mortgage debt altogether (if there’s a sufficient amount), but that is a decision that the mortgage lender gets to make. As a homeowner you should try to find out how the mortgage lender will use the insurance proceeds because if the mortgage debt is paid off that leaves you with no money to make repairs to your home.

August 17, 2016 in Home and Housing, Land Use, Natural Resources, Personal Property, Real Estate Finance, Real Estate Transactions, Recording and Title Issues | Permalink | Comments (0)

Thursday, April 28, 2016

A Look at the Latest Mortgage Foreclosure Data: On the Rise

(Source: TRACReport)

The Transactional Records Access Clearinghouse (TRAC), housed at Syracuse University, is a super helpful organization that I've used for a number of years now. The group issues TracReports that provide free monthly information on, among other things, civil litigation throughout the U.S. federal district courts. One item of interest that the group reports on deals with the number of new foreclosure filings each month. Check out this latest report:

The latest available data from the federal courts show that during March 2016 the government reported 505 new foreclosure civil filings. According to the case-by-case information analyzed by the Transactional Records Access Clearinghouse (TRAC), this number is up 12.7 percent over the previous month when the number of civil filings of this type totaled 448. The comparisons of the number of civil filings for foreclosure-related suits are based on case-by-case court records which were compiled and analyzed by TRAC (see Table 1). 

When TRAC last reported on this matter, foreclosure lawsuits had declined from a peak reached in May and June of 2012 but seemed to have bottomed out in January 2014. Indeed, as can be seen in Figure 1, the monthly count remained relatively stable from that point until about a year ago. When foreclosure civil filings for March 2016 are compared with those of the same period in the previous year, their number was up by nearly one third, or 32.7 percent. Filings for March 2016 are still substantially lower than they were for the same period five years ago however. Overall, the data show that civil filings of this type are down 25.1 percent from levels reported in March 2011.

Top Ranked Judicial Districts

Relative to population, the volume of civil matters of this type filed in federal district courts during March 2016 was 1.6 per every million persons in the United States. One year ago the relative number of filings was 1.1. Understandably, there is great variation in the per capita number of foreclosure civil filings in each of the nation's ninety-four federal judicial districts. Table 2 ranks the ten districts with the greatest number of foreclosure lawsuits filed per one million population during March 2016.

  • The District of Nevada — with 15.9 civil filings as compared with 1.6 civil filings per one million people in the United States — was the most active through March 2016. The District of Nevada was ranked first a year ago, while it was ranked fourth five years ago.

  • The District of Rhode Island ranked second and also ranked second a year ago.

  • The Southern District of Illinois now ranks third.

Recent entries to the top 10 list were Vermont, the Northern District of Georgia (Atlanta) and the Western District of Kentucky (Louisville), which are ranked seventh, eighth and sixth, respectively. 

The federal judicial district which showed the greatest growth in the rate of foreclosure civil filings compared to one year ago — up 700 percent — was the Western District of Kentucky. Compared to five years ago, the district with the largest growth — 239 percent — was the Northern District of Florida.

April 28, 2016 in Home and Housing, Mortgage Crisis, Real Estate Finance, Real Estate Transactions, Recording and Title Issues | Permalink | Comments (0)

Sunday, January 31, 2016

Housing in a Time of Expanding Crisis @USFLaw


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)

Thursday, May 17, 2012

"Property Law" at law school

I didn't take a course in "Property" in my New Zealand LLB; rather, I took courses in "Land Law" and "Equity and Succession".  Some thoughts:

* The basis of Land Law was the Torrens system and issues around indefeasibility, though of course estates in land, the relationships of landlord/tenant and mortgagor/mortgagee, easements, adverse possession, etc were part of the paper.

* Equity and Succession covered trusts, wills, and equitable jurisdiction (though in NZ, common law and equity are in a single court system - and some would say are "fused", at least to some extent).  This also considered realty vs personalty.

* Personal property and intellectual property were generally part of optional courses.

What this means is that the rule against perpetuities was part of Equity, rather than "Property" (and in New Zealand we have a Perpetuties Act, which generally makes things much easier).  It seems to be an obsession of US teachers (and students) of "Property"!

The failing of this system, however, was the lack of an overview of "Property" as a whole.  It is one thing to learn about land registration, estates in land, trusts, and so on - but quite another to miss out on "what is property?" (particularly given my earlier comments on the lack of graduate law courses in property).  On the other hand, that has had the benefit of discovering Rose, Heller, Gray, Merrill and Smith by reading them, rather than being taught them - which might be the best way to learn.

But what do the Americans think - is the rule against perpetuities here to stay in the first-year Property course?  Does it belong somewhere else? Will the first-year Property course itself remain in its current (varied) forms?

Thomas Gibbons

Law Book

May 17, 2012 in Estates In Land, Future Interests and the RAP, Law Schools, Property Theory, Recording and Title Issues | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 8, 2012

Keep a Very Close Eye on the Foreclosure Fraud Settlement

It seems as though every day for weeks now we've been told a settlement between state attorneys general and fraudulent foreclosers -- by which I mean the largest home mortgage lenders in the country -- is imminent.  The banks appear to be balking because they expected the type of suit filed by New York Attorney General Eric Schneiderman to be prohibited under the settlement -- but since Schneiderman is one of the key players in the settlement talks, there seems to have either been a serious misunderstanding or a serious play for leverage by Schneiderman.  For an excellent analysis of the negotiations, and of the foreclosure crisis generally, I can't recommend Yves Smith's blog Naked Capitalism highly enough.

One issue that MUST be non-negotiable is the ability of people who were wrongfully foreclosed upon to maintain civil suits against their foreclosers.  There is no indication that such suits will be barred under the settlement, but since the negotiations are not transparent we can't know until the settlement is announced.  My first year property students have now spent weeks studying the crisis -- in part because I'm hoping to ready these young lawyers-to-be to take up the fight to ensure that foreclosure fraud doesn't pay and that its victims receive restitution.  But if the state attorneys general negotiate away the only avenue victims of wrongful foreclosure have for relief, it will be the final injustice in a long, long line of them in this crisis.  Not to mention a defeat for the rule of law.

For a very good discussion of how we should assess the settlement, when it is finally arrived at and released to public scrutiny, see this article by Richard Eskow.

Mark A. Edwards

February 8, 2012 in Home and Housing, Mortgage Crisis, Real Estate Finance, Recording and Title Issues | Permalink | Comments (2) | TrackBack (0)

Tuesday, January 10, 2012

Hubbard, Palia, & Yu on Discrimination in the Mortgage Market

Glenn Hubbard (Columbia- Business), Darius Palia (Rutgers - Business), and Wei Yu (Cal State Poly - Business) have posted Analysis of Discrimination in Prime and Subprime Mortgage Markets.  Here's the abstract:

This paper examines evidence of lending discrimination in prime and subprime mortgage markets in New Jersey. Existing single-equation studies of race-based discrimination in mortgage lending assume race is uncorrelated with the disturbance term in the loan denial regression. At the individual loan-level, we show that race is correlated with both observable and unobservable risk variables, leading to biased coefficient estimates. To mitigate this problem, we specify a system of equations and use a full information maximum likelihood (FIML) method that does not need to identify instrumental variables for system identification. We find that minorities are less likely to be rejected than whites in the subprime market. The individual loan-level FIML results are robust to using two-stage least squares when we examine discrimination at the neighborhood-level. We also find that the reduction in rejection rates to minority neighborhoods from 1996 to 2008 cannot be fully justified by risk, suggesting a relaxation of lending standards to minority neighborhoods. Using the methodology of Mian and Sufi [2009], we also find evidence for strong credit supply effects.

Steve Clowney

January 10, 2012 in Recording and Title Issues | Permalink | Comments (0) | TrackBack (0)

Monday, November 7, 2011

Ellickson on the Costs of Complex Land Titles

EllicksonRobert 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.

Steve Clowney

November 7, 2011 in Real Estate Transactions, Recent Scholarship, Recording and Title Issues | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 9, 2011

Call for Papers on Land Tenure

Race/Ethnicity: Multidisciplinary Global Contexts seeks Articles for its March 2012 issue, Land Ownership and Tenure. The deadline for submissions has been extended to November 1st, 2011.

The United Nations Human Settlements Programme, concluded that more than one billion people live without any security of tenure in informal settlements in “developing” countries. If “land is not just a resource to be exploited, but a crucial vehicle for the achievement of improved socioeconomic, biological, and physical environments” (FAO), then access to land ensures the security and health of the poor. The politics of access to and exploitation of land and natural resources assume fundamental relations of power control and the policy of social inclusion; however, both notions imply and consolidate that access to land and land ownership, particularly in the Global South, reflect broader patterns of intra-institutional dynamics that explain how marginality and socio-political exclusion take place within countries and on the global stage.

Steve Clowney

August 9, 2011 in Recording and Title Issues | Permalink | Comments (0) | TrackBack (0)

Thursday, April 28, 2011

Property Issues and the Royal Wedding

Coat A childhood full of playing Dungeons & Dragons and trading Magic: The Gathering cards has left me far too interested in the Royal Wedding (it is, sadly, the closest I'll ever get to wearing chain mail or wielding a broad axe).  Luckily, there's at least a little overlap between my scholarly interests and the pageantry of Will and Kate's nuptuials.  As far as I can tell, the wedding raises at least three property issues:

1.  The shortage of hotels has inspired many Londoners to rent out their homes and become temporary landlords.  One expert estimates that London homeowners stand to take in an estimated $170 million in rents during this week.  Prices range from $50 a night for a single room in a private home to more than $6,000 a week to rent an entire house in central London.

2.  Royal watchers are gossiping about whether Kate and Will have signed a prenuptial agreement.  Family Law Solicitor Louise Liu speculates that even though William is worth $45 million, it's unlikely he's been encouraged to get a prenup with Kate. According to Liu, while prenups are routine in the U.S., they are persuasive but not legally binding in England.

3. What titles will the Queen bestow on William and Kate?  All titles are gifts from the monarch, so it is the Queen's perogative to choose which one to grant to her grandson and his new wife.  As the Telegraph explains, "Tradition dictates that royal men receive a title on their wedding - and often more than one."  Leading contenders include the Duke of Cambridge, the Duke of Sussex, and the Duke of Clarence.  A couple of Duchies produce serious income.  Prince Charles' Duchy of Cornwall estate, which stretches over 135,000 acres in the south-west of England, has an estimated value of $1 billion (647 million pounds) and produces $25 million a year in profits.  One final note on titles; according to tradition Kate would not become HRH Princess Catherine of Wales because she is not a Princess in her own right. Instead, she becomes HRH Princess William of Wales.

If you're looking for me tomorrow, I'll be the guy having tea and crumpets, glued to the TV.

Steve Clowney

April 28, 2011 in Gifts, Landlord-Tenant, Marital Property, Miscellaneous, Recording and Title Issues | Permalink | Comments (2) | TrackBack (0)

Monday, April 25, 2011

Watson on the Doctrine of Discovery

Blake Watson (Dayton) has posted The Impact of the American Doctrine of Discovery on Native Land Rights in Australia, Canada, and New Zealand (Seattle U. Law Review).  Here's the abstract:

This article describes the impact of the American doctrine of discovery, as set forth in Johnson v. McIntosh, 21 U.S. 543 (1823), on native land rights in Australia, Canada, and New Zealand.

Steve Clowney

April 25, 2011 in Recent Scholarship, Recording and Title Issues | Permalink | Comments (0) | TrackBack (0)

Thursday, March 24, 2011

Does the County Recorder's Office Have a Photocopier?

Maybe, like me, when you teach your students about recording acts and title searches, you tell them the county officials they'll need to work with to complete a title search are helpful. 

On the other hand, maybe not so much . . . .

From the Cleveland Plain-Dealer comes this account of an exchange between a Cuyahoga County Recorder's Office official (Patterson), and an attorney (Marburger) who is deposing him about the presence, or absence, of a photocopier in the office, under the watchful eye of defense counsel (Cavanagh). 

Marburger: During your tenure in the computer department at the Recorder's office, has the Recorder's office had photocopying machines?

Cavanagh: Objection.

Marburger: Any photocopying machine?

Patterson: When you say "photocopying machine," what do you mean?

Marburger: Let me be -- let me make sure I understand your question. You don't have an understanding of what a photocopying machine is?

Patterson: No. I want to make sure that I answer your question correctly.

Cavanagh: Dave, I'll object to the tone of the question. You make it sound like it's unbelievable to you that he wouldn't know what the definition of a photocopy machine is.

Marburger: I didn't ask him to define it. I asked him if he had any.

Patterson: When you say "photocopying machine," what do you mean?

Marburger: Let me be clear. The term "photocopying machine" is so ambiguous that you can't picture in your mind what a photocopying machine is in an office setting?


Apparently he cannot.  It continues . . . .

Cavanagh: There's different types of photocopiers, Dave.

Marburger: You're speaking instead of -- you're not under oath. This guy is.

Cavanagh: I understand that, but I understand what his objection is. You want him to answer the question, but I don't think it's fair.

Marburger: It's not fair?

Cavanagh: It's not a fair question. A photocopy machine can be a machine that uses photostatic technology, that uses xerographic technology, that uses scanning technology.

Marburger: I don't care what kind of technology it uses. Has your offices -- we don't have technocrats on the Ohio Supreme Court. We've got people like me, general guys --

Cavanagh: Objection. 


I love that objection; apparently defendant's counsel objects to plaintiff's counsel's description of himself as a general guy.  But there's more . . . .

Patterson: I understand that there are photocopying machines, and there are different types of them just like --

Marburger: Are there any in the Recorder's office?

Patterson: -- there are different cars. Some of them run under gas power, some of them under electric power, and I'm asking if you could help me out by explaining what you mean by "photocopying machines" --

Marburger: That's a great point.

Patterson: -- instead of trying to make me feel stupid.

Marburger: If you feel stupid, it's not because I'm making you feel that way.

Cavanagh: Objection.


At this point, if my 14 year-old were here, he'd be yelling something like 'pwnned!', which apparently means 'owned,' which in human apparently means 'that was a zinger.'   But wait!  Perhaps if plaintiff's counsel could simply re-phrase the question, we could find an answer that makes everyone happy . . . .

Marburger: Have you ever--do you have machines there where I can put in a paper document, push a button or two, and out will come copies of that paper document also on paper? Do you have such a machine?

Patterson: Yes, sir.

Marburger: What do you call that machine?

Patterson: Xerox.


And good luck with that title search, students.


Then again, there are photocopiers, and then there are photocopiers, as we learned from The Wire:


Mark A. Edwards

[comments will be held for approval, so there will be some delay in posting]

March 24, 2011 in Recording and Title Issues, Teaching | Permalink | Comments (1) | TrackBack (0)

Monday, January 10, 2011

Foreclosures and the Failure of the American Land Title Recording System

I have just posted an essay to SSRN entitled "Foreclosures and the Failure of the American Land Title Recording System."  In it, I argue for the federalization of the land title recording system.  Here is my abstract:

In this essay, Marsh argues that the current foreclosure crisis should serve as a wake-up call for a long-overdue modernization of the American land title recording system.  Lenders invented the Mortgage Electronic Registration System (MERS) because the land title system, developed in a far different time and place, failed to meet the needs of the modern real estate industry.  But a private MERS-like system is not the answer.  Instead, Marsh argues that the federal government should implement a solution that replaces both the existing local land title system and MERS. 

An ideal system should be organized around some clear principles.  It should be transparent.  It should be easy to search, through dynamic, robust indexing, and easy to access, preferably through the Internet.  Documents in PDF form should be downloadable.  Electronic filing should be facilitated.  There should be uniformity and consistency in the rules governing the form and substance of documents eligible for recording.  The system should be public.  Establishing and protecting a clear registry of property interests is and should continue to be an essential function of government.

Any feedback would be greatly appreciated!

Tanya Marsh

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January 10, 2011 in Recent Scholarship, Recording and Title Issues | Permalink | Comments (5) | TrackBack (0)