PropertyProf Blog

The Trick-or-Treat Index

Richard Florida is at it again:

With Halloween just around the corner, you probably don’t have time to move to a different city to improve your (or your kids’) candy haul. But you may be lucky to already live in one of the best cities for trick-or-treating. We crunched the numbers to come up with a list of the best cities to be in when the costumes come out.

Steve Clowney

Another View on Foreclosure Moratoria

I enjoyed Tanya's insightful Huffington Post op-ed on foreclosure moratoria.   Her concerns about the effect of a foreclosure moratorium on our confidence in private contracts is well-taken.  But, for reasons explained below, I have to very respectfully disagree with her conclusions. 

History is always a great teacher.  As I've argued elsewhere, that's especially true when it comes to the mortgage crisis.  Before the Obama administration concludes that a foreclosure moratorium is a poor policy choice because its potential effects on the mortgage loan market, it should look at the actual effects on the mortage loan market of previous foreclosure moratoria.

As David C. Wheelock explains here and here, during the foreclosure crisis of the Great Depression, 33 states enacted some form of foreclosure moratoria, often limited to those borrowers most likely to be able to repay their loans with just a little modification and/or time.  Wheelock clearly supports Tanya's contention that interfering with private contracts did raise borrowing costs for later borrowers.  But, although the moratoria did not come without some cost to future borrowers, their long-term negative impact seems to have been fairly negligble.  Meanwhile, the moratoria had a dramatic impact on lowering the numbers of foreclosures, and not just during the moratoria periods.  In many cases, moratoria gave the federal government, lenders and borrowers some breathing space to re-structure loans so that foreclosures were avoided altogether. 

As Tanya discusses in her op-ed, in many cases lenders are behaving irrationally, foreclosing on loans with no prospect of recovering their losses through sales in the current market.  Simultaneously, families are rendered homeless, worsening the general economic crisis even without consideration of the human costs, and neighborhoods are devastated, lowering property values for those who aren't deliquent -- but increasing the chances they will become delinquent, since lower property values can take homeowners underwater, making refinancing adjustable rate loans impossible at the end of their term.

And all of that is without even considering the very real possibility that lenders are foreclosing on loans that they have no legal right to foreclose upon, which we know is happening in the rush to foreclose.

Stopping irrational -- and sometimes illegal -- behavior, to the ultimate benefit of all parties, seems to me generally a very good idea.  That's all a well-designed foreclosure moratorium does.  We know that, because we've done it before.

Mark A. Edwards

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Ben Barros

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A Government-Mandated Foreclosure Moratorium is a Popular (and Bad) Idea

I apologize for the shameless self-promotion, but I just had an op-ed published on Huffington Post.  The Washington Post reported today that over half of Americans support a mandatory moratorium.  In my piece, I defend the White House's resistence to popular calls for a government-mandated foreclosure moratorium.

I didn't delve into this point in the op-ed, but does anyone know what the proposed legal basis of a foreclosure moratorium might be?  I find the idea that the President or Congress could order state courts to halt hundreds of thousands of cases between private parties fairly mind-boggling.   

Tanya Marsh

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Contingent Remainders and Executory Interests

Steve's last post mentioned a recent discussion of contingent remainders and executory interests on the Property Prof listserv.  In case you don't have access to the listserv, and are curious about the discussion, here is a quick summary.  The question involved this conveyance:  "to A for life, then to A's children who reach the age of 21."  A is alive, and has two children, B, age 24, and C, age 17.  A has a life estate, and B has a vested remainder subject to open.  But what does C have?  A contingent remainder or an executory interest?  C's interest looks a bit like a contingent remainder, in that it will become possessory only at the natural end of the preceding estate, but it also looks like an executory interest, in that it will divest part of B's vested remainder when and if C turns 21.  The majority view on the listserv was that under modern law, C should be seen as having an executory interest, though there were still a few folks who thought it was best seen as a contingent remainder.  There also was consensus that the distinction between the two doesn't matter in modern law, so this was a true academic debate in every sense of the word "academic."

Ben Barros

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How Competitive is the Property Market?

An aspiring property prof writes:

I am a practicing lawyer (a real-property litigation specialist, actually) giving serious consideration to transitioning to academia, and property theory is my strongest interest. Your blog is great! I want to learn whether property is a highly competitive field to enter as a new professor. I understand that certain fields (like con law, say) are more competitive than business-related fields like tax or corporations. Does anyone have a sense where property law fits on that spectrum? Thanks in advance.

I'd say that Property is much closer to Tax and Corporations/Bus Orgs than it is to Con Law.  Plus, if you do property work, you probably are qualified to teach related high-demand subjects like Contracts and Corporations/Bus Orgs.  The trick for an experienced practicing lawyer is to become a strong academic candidate.  Here, the most important thing to do is to write and place at least one solid law review article.  There is a lot of good advice out there in the blogosphere on becoming a good candidate.  Among other things, Tanya's post on her interview experience might be helpful.

Ben Barros

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Is Property Dead?

For those not on the propertyprof listserve, let me report that there has been a very lively discussion about future interests over the last week or so.  As I have followed the email thread, I have been remarkably impressed by the passion, learning, and intellectual discipline of my colleagues.  The conversation has been scholarly yet accessible, and full of strong opinions yet remarkably cordial.  All in all, it's been a real advertisement for everything that's great about working in the property field.

And yet...  And yet, the discussion has also left me a little cold.  The subtle difference between executory interests and contingent remainders has sparked more discussion than any other topic over the last year?  Really?  It just feels small somehow, persnickety even.  Disciplines naturally ebb and flow over the course of years.  Is property just in a lull? 

Steve Clowney

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Why Sprawl is Good

Rick Duncan (Nebraska) comments.

Ben Barros

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Jon Stewart Rally to Restore Sanity

I tried to think of a property hook, but gave up.  Any Property Profs going to the Rally to Restore Sanity in DC this Saturday?  My 4th grader has Friday off from school, so we're going to head to the Smithsonian on Friday, hang out with some reasonable people on Saturday, and get back in time for trick or treating.

I'm trying to find the right shirt to wear.  Current contenders are here, here, and here.

Anyone else making the trip?

Tanya Marsh

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Hiring Property Profs

Well, we're just days away from the AALS hiring conference in Washington.  Listening to the drums, it sounds like a number of law schools are out there looking for new property profs.  Cincinnati, Elon, Florida State, Fordham, Florida International, Hamline, New Mexico, Richmond, Roger Williams, St. Johns, Stetson, Touro, Utah, and West Virginia have all expressed interest in candidates that want to teach property. 

General advice on the hiring market is plentiful, but I was wondering if the readership had any particular advice for budding property scholars.  I would venture that it's important to give some thought to how you're going to teach the course (I was asked on a few occasions how I would teach future interests).  Any other thoughts?

Steve Clowney

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Public Housing Problems

Yesterday's N.Y. Times ran story about the dire state of public housing around the country.  Some key 
stats:

Newark . . . has shuttered 600 units that it cannot afford to fix. The city was given federal approval to raze 1,004 more, but it cannot pay for the demolition. In Washington, the District of Columbia Housing Authority . . . is still $200 million short of what the authority says it needs for repairs. Baltimore’s housing authority needs $860 million for crucial repairs, said the housing commissioner, Paul T. Graziano; it has demolished or shuttered 33 percent of its units since the 1990s and has another 600 “on the verge of failure,” with falling cabinets, unhinged doors and aging electrical systems.

The case for housing vouchers looks stronger and stronger everyday, but what to do about these aging units that still exist?  Is it more cost effective to knock them down and start over (with different policies) or spend the money to rehab a the crumbling buildings?

Steve Clowney

Pic of Cabrini Green used under creative commons license

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Has the Worm Turned?

As the foreclosure crisis developed, it became quite clear that lenders were more than willing to assert the full scope of their legal rights (and then some) in subprime lending, securitizing and selling mortgage-backed securities, and foreclosing on delinquent loans.  Castigated for reckless lending to borrowers who didn't understand and couldn't hope to re-pay their loans, lenders seemed to collectively shrug and respond, 'Hey, it's legal.' 

Repeated pleas that lenders not evict blameless tenants in foreclosed properties (if only as a matter of self-interest, since lenders would have some income from the property) fell on deaf ears, requiring legislatures to act.  And as Brent T. White incisively argued, underwater homeowners felt a sense of moral and social responsibility that was not shared by their lenders, who enforced the letter of the law to maximize profits and minimize losses.

Has the worm turned?  As Tanya noted her post below, foreclosures are grinding to a halt because borrowers are having the temerity to demand in court that every last bit of the lenders' paperwork is in order -- and as it turns out, because lending was so reckless, and loans were sold and re-sold and packaged and re-packaged with such velocity on the go-go secondary and tertiary markets, often by companies that disappeared with their paperwork when the crisis began, there is precious little valid paperwork.  I imagine that somewhere, in some road-side storage facility in Nevada, a lot of documents that once belonged to a fly-by-night 'no-asset, no-income' lender are yellowing and curling at the edges.

And today in the New York Times, comes the story of a bunch of buyers who are using the letter of the law to back out of condo purchase agreements with their deposits in tow.  They aren't using the law as it was intended, but they are using it to its letter.  Is that unfair?  Hey, it's legal.

I have to admit, I'm disturbed by my willingness to cackle and shrug my shoulders.  By doing that, I'm mirroring the attitude of the mortgage-back securities machine that caused the crisis in the first place, an attitude which has disturbed a lot of us for a long time.  But, since the New York Times also reported today that on Wall Street, average pay increased 20% this year, I think I'll savor the impotent sense of schadenfreude for at least a few hours.

P.S. If you need help maintaining your irresponsible sense of glee at lenders' troubles, give a listen to the first segment of this This American Life episode, in which we meet several sneeringly ungrateful Wall Street bailout beneficiaries.  That should help.

Mark A. Edwards

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The Road Less Traveled

A stunning composite image of the 26 million individual road segments in the United States. No other elements (such as the outline of geographic features) have been added to this map.  Nonetheless, facts about both geography and population density emerge as roads move to avoid mountains and disappear in areas of low population.

Steve Clowney

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Great Places

The American Planning Association names the top ten Public Spaces in America.  Winners include the Ferry Building in San Francisco and Bryant Park in New York.

Steve Clowney

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Recording Acts, MERS, and the Foreclosure Crisis

I haven't posted lately for a very good reason -- I've been distracted by the recording acts, the residential foreclosure crisis, and the Mortgage Electronic Recording System (MERS).  I've been fascinated by the news articles making vague and mysterious references to lender affidavits which are taking the place of missing "paperwork."  Some of the missing paperwork, no doubt, is evidence (in the form of a mortgage assignment) that the foreclosing lender actually owns the debt that it is attempting to foreclose.  Presumably, if one is in the business of lending and purchasing debt, keeping good records about what debt one actually owns would be a fairly fundamental concept.  I am constantly surprised that in reality it isn't that simple. 

MERS, a private, parallel recording system owned by and for the benefit of the mortgage industry, has been .... I think the right word here is "interfering" ... with the American land title system since 1995.  Basically, lenders become dues-paying members of MERS then record an original mortgage with MERS named as the lender's "nominee" or "mortgagee of record."  But MERS never actually owns the debt -- it is just an agent.  Apply this legal fiction to state mortgage law and hilarity, or possible a foreclosure debacle, ensues.  Christopher Peterson (Utah) has written a very thorough article on the subject which was published this summer in the University of Cincinnati Law Review or can be found on SSRN here: "Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System".

So, I've been spending my free time learning more about the foreclosure moratorium and writing a short essay that I hope to publish in an online law review.  In my essay, I argue that this whole mess demonstrates that the time has come to replace our local land title recording system with a single federal online system organized around the kind of searching technology that we take for granted on our smartphones.  If anyone has any advice on submitting to an online journal, please let me know.

Tanya Marsh

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Sample Real Estate Financing Documents for Teaching?

I'm looking for forms of (a) a deed of trust; (b) a sale-leaseback; (c) an installement land contract; and (d) a subordination agreement from a real estate context to use with my students.  I have the Fannie Mae form deed of trust, but would like to see other samples.  Forms for notes and mortgages are pretty easy to come by, but if you have any that you really like, I'd love to see those as well.  If you have any such forms that you'd be willing to share, please e-mail me - [email protected] .

Thanks.

Ben Barros

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Low Buildings, High Costs

Matt Yglesias on the high cost of the height restrictions that Washington D.C. imposes on builders:

[G]overnments of growing municipalities need to understand that urban space is a hugely valuable commodity. Rules which mandate that the space be used inefficiently are extremely costly. Sometimes it’s a price worth paying—you wouldn’t want a city with zero parks—but there are limits to how much it makes sense to sacrifice for aesthetics.

The thrust of Yglesias's argument is that the height restrictions unnecessarily push low skill jobs into the suburbs.  In a follow-up post, Atrios also puts forth out that restricting skyscrapers creates more medium rises at the expense of more human scale buildings. 

I think these arguments have some validity, but they miss a vital point. The authors ignore the important role that architecture plays in stabilizing and propagating both cultural ideals and group identity.  There's something special about being from a place like Pella, Iowa or Solvang, California or Santa Fe, New Mexico where all the buildings have the same look.  It says something about the place, the people, and the value of history.  For me, there's similar meaning in the District's regulations, which have preserved the Washington Monument as the tallest building around.

Steve Clowney

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Property Symposia

It seems to me that there is a relative lack of law review symposia on property-related issues.  I don't have any solid data to go on, but it seems to me that there should be more property symposia given that (a) there are lots of property profs out there and (b) there are so many amazingly cool property issues that would benefit from consideration in a symposium.

This leads me to two questions.  First, do you agree that property symposia seem scarce?  Second, what specific subjects do you think would make good symposium topics?  Off the top of my head, I'd like to see symposia on (1) the judicial takings issue; (2) home and the law; (3) statutory reform of property law; (4) the future of estates, future interests, and the RAP in light of the proposed Restatement (Third); (5) the future of adverse possession; (6) common interest communities; (7) critical evaluations of the new "progressive" property; (8) the relationship between property and liberty.

Organizing symposia, of course, can be a bit of a pain.  But if there is enough interest out there, it might be possible to come up with a plan to coordinate symposia, perhaps under the auspices of ALPS.

Ben Barros

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The Worst Things About Sprawl

 Jeff Speck, co-author of the seminal Suburban Nation (along with Andres Duany and Elizabeth Plater- 
Zyberk), puts togehter a slide show about the worst consequences of sprawl.  From the author:

[S]prawl has quietly been identified as a central cause behind a growing list of mounting national crises including foreign oil dependency, climate change, and the obesity epidemic. With economists, environmentalists, and epidemiologists all bemoaning suburbia, it is a good time to step back and remind ourselves what we're still up against.

Steve Clowney

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Our Bipolar Relationship with Central Banking

For 219 years, the United States has indulged a funny-if-it-wasn't-so-awful bipolar impulse with regard to central banking and -- more relevant for our purposes -- housing lending.  We have an ideological distaste for central banking authority that stretches back to Jefferson, who did has damnedest to kill the First Bank of the United States, and to Andrew Jackson, who killed the Second.  The reason there was a Second, after the First had been killed, was that some sort of central banking authority is absolutely necessary in times of economic crisis to restore order, and in times of economic stability to preserve order.  The problem is: it's ideologically distasteful for a federalist nation to have a a central bank, so as soon as a crisis passes, we kill it, or at least neuter it.  Until, that is, the next crisis arrives.  Following stability and, therefore, the death of the Second Bank, the United States entered into a long period of Panics that make this recession look very tame, that lead eventually to the establishment of the Federal Reserve, a central bank in almost all but name.  It was a weak institution at first, but its power expanded in response to the Great Depression.  

Also in response to the Great Depression, we created a whole bunch of central housing lending authorities such as Fannie Mae that worked in system with each other very well.  But in a way they killed themselves by working too well -- all that successful lending looked good to the private sector, and what was a capitalist country doing with so much public control of lending anyway?  So, one by one the successful authorities were killed or privatized.  Until, that is, the latest crisis arrived and we re-nationalized them.  As soon as things stabilize, of course, we'll re-privatize them.  It's an expensive hobby.

I wrote about this historically bipolar relationship a little while ago, and predicted that eventually, when the economy began stabilize again thanks in part to the Federal Reserve's emergency lending, we'd turn out gaze with disgust on the Federal Reserve and wonder why we had this powerful central banking authority anyway.  I was a little disheartened but not surprised to read in the New York Times, therefore, that the Federal Reserve is now a target of the same party that desperately relied on it at the end of the previous administration.

Mark A. Edwards

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