Tuesday, November 30, 2010

Are we over-parked?

Ryan Avent on government over-provision of park land:

[P]arks are the kinds of thing people say they want but don’t actually care much about. Or rather, they’re happy to take parks when those parks are provided for them “free”, through government regulation, but not when they have to pay for the benefit they’d receive, which should tell us that the benefit is not all that great.

Steve Clowney

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November 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Sunday, November 28, 2010

Foreclosure, and Planting the Seeds of a Future Crisis

To get a sense of how badly the legal system has responded to the foreclosure crisis, consider this:  we are three years into it, hundreds of thousands have lost their homes, states like Florida are running outrageous special foreclosure courts where retired judges aim to process 200 foreclosures per day -- and only now are actors in the system beginning to ask whether the parties seeking foreclosure and eviction actually have standing.

Standing is -- or should be -- question #2 in any legal proceeding (right after jurisdiction).  But in Florida, here are the questions that are asked, according to the Wall Street Journal, no less:

"'Case No. 136,' the clerk intoned. 'Wells Fargo versus Edward Callahan.'

Judge Carlin asked whether the man was living in the house and was current on his mortgage. He answered no to both questions.

'Your house will be sold in 45 days,'' said the judge. 'That's all for today.'

Case time: 15 seconds."

Public interest lawyers like Prentiss Cox here in Minnesota have been fighting a lonely battle for a long time, trying to get courts to demand that parties attempting to foreclose demonstrate standing.  A handful of judges, like Judge Arthur Schack in New York, have occasionally demanded this absolutely basic threshold issue be resolved first.  But they are tiny grains of sand in the foreclosure machine. 

But maybe -- maybe -- people who take the rule of law seriously are finally beginning to be heard. 

The New York Times reports today that the U.S. Trustee is beginning to demand that foreclosers demonstrate standing in bankruptcy cases.  That news isn't amazing; what's amazing is that it is news

I spend a lot of my time researching property rights restitution issues.  I've often argued that restitution is among the most complex and important issues in the world of property rights today.  Complex, because once someone has been wrongfully dispossessed of property, restoring it to them becomes almost impossibly difficult over time; important, because few things create as much lasting bitterness as the wrongful dispossession of property (see, e.g., crisis, Israeli-Palestinian). 

One day, we may well look back at the foreclosure crisis and ask, to paraphrase David Byrne, 'my god, what have we done?'

Mark A. Edwards

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November 28, 2010 in Home and Housing, Law Reform, Mortgage Crisis | Permalink | Comments (0) | TrackBack (0)

Friday, November 26, 2010

Best Use of Property Humor in a Sitcom Goes To...

30 Rock:

Steve Clowney

November 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Thursday, November 25, 2010

How Private Property Saved the Pilgrims

Happy Thanksgiving!  This is surely the greatest of all holidays - (nearly) everyone celebrates, and it centers on family, eating, and shopping.  Now, unlike Ben, I think Turkey is pretty gross --  well, not gross but utterly and completely tasteless.  There's a reason no one can agree on how to cook a turkey (Deep fry it? Cut it in half? Cover it in herbs?).  That's because no one has ever figured out how to make that bird taste like anything good.  So, I announce publicly and proudly, that I prefer chicken on Thanksgiving. 

Also, in honor of the holiday, it's fun to recap the argument that private property saved the pilgrims. Benjamin Powell, an economist at Suffolk, tells the story here:

Many people believe that after suffering through a severe winter, the Pilgrims’ food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the pilgrims continued to face chronic food shortages for three years until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.

In 1620 Plymouth Plantation was founded with a system of communal property rights. Food and supplies were held in common and then distributed based on equality and need as determined by Plantation officials. People received the same rations whether or not they contributed to producing the food, and residents were forbidden from producing their own food. . . . Because of the poor incentives, little food was produced.

Faced with potential starvation in the spring of 1623, the colony decided to implement a new economic system. Every family was assigned a private parcel of land. They could then keep all they grew for themselves, but now they alone were responsible for feeding themselves. This change, [the Pilgrims recorded], had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been. Giving people economic incentives changed their behavior.  Once the Plymouth Plantation abandoned their communal economic system and adopted one with greater individual property rights, they never again faced the starvation and food shortages of the first three years.

This is a yarn that makes the property-lizard part of my brain start tingling.  However, it doesn't really explain how the Indians managed to survive here for thousands and thousands of years.

Again, happy chicken day.

Steve Clowney

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November 25, 2010 | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 23, 2010

Disunion

Frequent readers may remember that an important tenet of my property teaching philosophy is that the struggle over property rights has a central place in history.  I've argued that we might undersell the importance of property rights by focusing so intensively on the doctrinal trees that we miss the political-economic forest.

One way I like to discomfort my students, and bring into stark relief the historical importance of property rights, is by examining the emancipation of slaves through the lens of the Takings Clause. 

The Takings Clause may seem (and, I think, is) a somewhat callous and inadequate lens through which to view the abject horror of slavery, but that's exactly how some framed the issue 150 years ago.  In a debate on the Senate floor, Henry Clay (for one) argued that emancipation of slaves would be a taking of private property, requiring just compensation of the slave owners.  Anticipating the reply that emancipation could not be a taking because humans could never have legitimately been property, Clay said (I like to imagine coolly), "That is property which the law says is property."  Sale of slaves

In both my first year course, and my Comparative Property Rights seminar, I make my students debate that proposition.  I ask them simply: Is it true?  Most say no.  So then I ask: If law can't tell us what is property, then what can?  No one, myself included, seems to be able to answer that.

All that is a prelude to telling you that for the past few weeks, the New York Times has been running a wonderful feature, Disunion, which provides a day-by-day analysis, using primarily contemporary accounts, of the descent into the Civil War immediately preceeding and following Lincoln's election in 1860.  For history buffs like me, it's fascinating.  I find myself more eagerly concerned about the daily news from November 1860 than the news on the front page. 

The news from this week (minus 150 years) has been particularly ominous.  Southern state legislatures are meeting to 'discuss' secession in the wake of Lincoln's election, but the extreme rhetoric of the meetings leaves no doubt that horrible violence is at hand.  Members of the cabinet of the sitting President are preparing to join them.  The federal government is teetering. 

Meanwhile, President-elect Lincoln has remained maddeningly silent.  Finally, the pressure becomes unbearable, and through Illinois Senator Lyman Trumbull, Lincoln attempts to reassure the South: "when Trumbull told the crowd that under Lincoln, all the states will be left in complete control of their own affairs, including the protection of property, those in the know believed they were hearing the words of the president-elect."  The meaning of Lincoln's pledge to protect property was unmistakable.  Lincoln was attempting to tell the South that, in Clay's words, that was property which the law said was property -- including human beings.  For Lincoln's admirers, that pledge may come as a shock.  He was not yet fully committed to emancipation.Slave deed   

But, of course, nothing Lincoln could say or do would reassure the Southern legislatures.  They didn't trust him or the abolitionists who supported him.  War was on the horizon. Within five years of that week in November, 600,000 Americans would be dead.

As I like to say to my students, when it comes to property rights, damn right, there will be blood.  

Interestingly, in hate-laced rhetoric that resonates today, secessionists cast Lincoln and Vice President-elect Hamlin as something 'other' than bona fide Americans.  Southern media and politicians constantly accused Hamlin in particular of having “black blood in him,” or being descended from Native Americans.  One Southerner wrote to Lincoln, offering to buy the "intelligent mulatto boy" Hamlin from him.

The Disunion series is a fantastic teaching tool on lots of levels, but it is a treasure trove on the historical centrality of property rights.  Check it out.

Mark A. Edwards

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November 23, 2010 in Property in the Human Body, Property Theory, Takings, Teaching | Permalink | Comments (2) | TrackBack (0)

A Market for Hair

Over at the Faculty Lounge, Bridget Crawford has an interesting post about the market for human hair.  Crawford seems to suggest that this market should give people pause because the selling of hair is driven by dire poverty. 

As an initial matter, I find this market endlessly fascinating.  The New York Times recently estimated that the U.S. imports $250 million worth of human hair.  Much of the demand comes from the growing popularity of weaves/hair extensions - a trend that started long ago in the black community but has become increasingly common among white celebrities (see, e.g., the Paris Hilton lawsuit over hair extensions).  A good weave is also surprisingly expensive.  Buying fine quality hair and having it sewed in by an expert hairdresser can cost thousands of dollars.  Finally, it's worth noting that there is some unease (tension is too strong a word) between the black consumers of hair-care products and the Korean businesspeople who seem to dominate the market for ethnic hair goods.

From my seat, it's tough to see why the selling of hair is problematic.  It gives the poor another arrow in their quiver of economic resources without negatively impacting human dignity.  Selling a bundle of hair seems far more like selling an idea than it does like selling organs -- there's an inexhaustible supply, there are no safety concerns, and it doesn't seem to affect people's altruism (plenty of folks still donate to locks of love).  Moreover, a lot of the hair that's brought to America had originally been ritualistically donated to temples in India.

I do wonder, however, if I'd feel quite the same if I came from a community that engages in ritual hair covering.

Steve Clowney

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November 23, 2010 | Permalink | Comments (0) | TrackBack (0)

Monday, November 22, 2010

The Stagnation of the Common Law of Property

I'm uploading older articles to SSRN, so I thought I'd mention a short piece that I co-authored this summer for the Indiana Law Review.  You can find it here.  While the second half of the article discusses changes in the Indiana law of property over the past year, the first half is a short essay in which I lament the stagnation of the common law of property.  Although this article specifically concerns Indiana, I think that this is broadly true.  I'm sure that my thesis will be strongly challenged, but I think it reflects the frustrations of transactional real estate attorneys -- too much uncertainty leads to settlements which do nothing to advance the law.  I've been involved in circumstances that would have made great test cases, but my clients were just too darn risk averse.

Here's my conclusion:

This essay argues that common law of real property law in Indiana, and more broadly, is stagnating. This stagnation of the common law of property results from a combination of factors. Transactional attorneys view the litigation process as unworkable, particularly in the real estate context, for three key reasons: (1) the cost; (2) the length of time until resolution; and (3) the uncertain outcome. If neither the common law nor statutory law provide easy answers to an issue, the parties are likely to conclude that they are better off resolving their differences out of court rather than spending time and money to achieve an unpredictable result. This situation is a classic Catch-22 -- the parties to real estate disputes refuse to bring their cases to the appellate courts in part because of the failure of the courts to modernize the Indiana common law of property, but the appellate courts of Indiana have limited opportunities to modernize the law because of the failure of parties to modern disputes to allow their cases to be heard.

Tanya Marsh

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November 22, 2010 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Resources on the Mortgage Crisis

Last week in my Real Estate Transactions class, we focused on financing residential and commercial real estate, while looking at the current mortgage crisis.  A few materials that I found helpful:

The reports (and executive summaries) of the Congressional Oversight Panel.  A full list can be found here.  The ones I found most useful were: (i) the February report, regarding commercial real estate, and (ii) the November report, regarding the current issue of whether securitized residential mortgages were properly documented and therefore can be legally foreclosed.

An interesting counterpoint to the COP's November report is a White Paper released by the American Securitization Forum last week.  It can be downloaded through a link in the press release here.  The White Paper was endorsed by thirteen large law firms, which will surely preview arguments those firms will make in the lawsuits to come.

Finally, the Senate Banking, Housing & Urban Affairs Committee held some hearings last week on these issues.  A list of the witnesses and links to their written comments can be found here.  Particularly of interest is the written testimony of Associate Professor Adam Levitin of Georgetown, who refutes the legal theories set forth in the ASF's White Paper.

A little light reading for your Thanksgiving holiday weekend!

Tanya Marsh

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November 22, 2010 in Mortgage Crisis | Permalink | Comments (0) | TrackBack (0)

Friday, November 19, 2010

Tristan da Where?

An excellent peek at the ten most remote places on Earth.

Tristan

For more information on Tristan da Cunha see here, here, and here.  According to Wikipedia, "All land is communally owned. Livestock numbers are strictly controlled to conserve pasture and to prevent better-off families from accumulating wealth. No outsiders are allowed to buy land or settle on Tristan."  Unpacking that paragraph could generate a lifetime's worth of property scholarship...

Steve Clowney

(photo of the settlement on Tristan da Cunha found with Creative Commons search)

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November 19, 2010 | Permalink | Comments (0) | TrackBack (0)

Thursday, November 18, 2010

Res Ipsa Loquitur

Ever wonder what actually happened to mortgage loans during the securitization goldrush?  From today's Huffington Post.  Click on it to blow it up (in the positive sense).

CHART
 
Mark A. Edwards

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November 18, 2010 in Mortgage Crisis | Permalink | Comments (0) | TrackBack (0)

Food & Des(s)erts

Walgreens is conducting a neat experiement that may shed some light on whether the lack of supermarkets in urban areas amounts to a market failure.

Among students of the contemporary metropolis, “food deserts” have become a widely known problem. The term is generally used to describe urban neighborhoods where there are few grocers selling fresh produce, but a cornucopia of fast-food places and convenience stores selling salty snacks . . . .

Walgreens, the drugstore chain founded in that city more than 100 years ago, [has] started selling an expanded selection of food, including fresh fruits and vegetables, at 10 locations selected because they were in food deserts. The experiment in creating these “food oases” is intriguing because it involves a well-known retail brand not typically associated with groceries . . .

Steve Clowney

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November 18, 2010 | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 17, 2010

Summary of State Foreclosure Laws

My colleague Juliet Moringiello pointed me to the National Consumer Law Center's handy summary of state foreclosure laws.  Lost of useful stuff in there.

Ben Barros

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November 17, 2010 in Mortgage Crisis, Real Estate Finance, Real Estate Transactions | Permalink | Comments (1) | TrackBack (0)

Philadelphia's 40,000 Abandoned Houses

The Philadelphia Inquirer reports on the plague of vacant and abandoned houses that has overwhelemed the city:

A persistent abandoned-property problem has reduced the value of Philadelphia homes by an average of $8,000, according to a new study. The report from Econsult Corp. puts Philadelphia's blight troubles into stark economic terms, estimating that the more than 40,000 vacant or abandoned properties rack up $20 million in annual maintenance costs, rob the city of $2 million in annual tax revenues and reduce property values.

Steve Clowney

November 17, 2010 | Permalink | Comments (1) | TrackBack (0)

Tuesday, November 16, 2010

Rachel Whiteread: Artist, Property Theorist

Rachel-Whiteread-house For my latest writing project I've been reading a lot about memory and the uses of sculpture in public spaces.  After spending a lot of time in our Art History library, I think I've finally uncovered my favorite memorial artist: Rachel Whiteread.  Whiteread is a 47-year-old, British sculpture who is best known for her concrete casts of everyday items.  Her most famous work is, most likely, the Judenplatz Holocaust Monument in Vienna (see here).    

I think that I'm drawn to Whiteread's work because it's fundamentally about property and the human relationship to objects.  Take her Turner-prize-winning piece, "House" (pictured right). In 1993, Whiteread created "House" by spraying liquid concrete into an empty building and then removing the walls (for other pictures see here).  On one level the ghostly sculpture served as a monument to lost communities.  The concrete stands, anthropomorphically, for the people who are no longer there.

But more importantly, by fossilizing a complete living space, I think that Whiteread reminds the viewer how basic our needs remain, even as the bric-a-brac that fills our lives seems to grow and grow.  On a basic and primal level we all need some kind of shelter, but not much beyond that.  In that one small respect, Whiteread seems to say, everyone is the same.  Finally, I'd argue that the tomb-like nature of her work calls our a reminder that none of this stuff follows us when we cross over.  

Steve Clowney

(image found with creative commons search)

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November 16, 2010 | Permalink | Comments (2) | TrackBack (0)

Monday, November 15, 2010

A Modest Proposal to Avert Another Mortgage-Backed Securities Disaster

At its core, the mortgage-backed securities crisis is the product of an inadequately regulated mortgage-industry system.  This inadequacy resulted in a massive transfer of wealth from you and me to lenders and investment banks, and an economic crisis that continues the plague the country.

So I've been playing a thought-game: what's the smallest amount of regulatory reform that would completely prevent this disaster from recurring? 

I've got a nominee.

Before I explain it, I need explain how we got to the point where we need it.  To that end, here's the mortgage-backed securities crisis, in 10 easy-to-understand steps!

(follow the bump)

 

Continue reading

November 15, 2010 in Home and Housing, Law Reform, Mortgage Crisis, Real Estate Finance | Permalink | Comments (2) | TrackBack (0)

"Sleeper" House sold at foreclosure auction

Thanks to Tom Roberts (until recently of Wake Forest) for the following:

Property teachers who are movie buffs may want to use the sale of Woody Allen’s “Sleepers” house as an example of the decline in real estate prices, from $3.4 million in 2006 to $1.5 million at yesterday’s sale, and the workings of statutory redemption.  The article can be found here.


Tanya Marsh

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November 15, 2010 in Mortgage Crisis | Permalink | Comments (0) | TrackBack (0)

$500,000 Profit for Sale of Virtual Property

The online world Entropia Universe, already the home of highest initial sale price for a piece of virtual property ($300,000), just had what is probably the most profitable virtual real estate transaction to date.  Jon Jacobs (aka "Neverdie") sold his share in a virtual asteroid for $500,000.  He had already made back his initial $100,000 investment over the past few years by renting out the right to use parts of the asteroid to other players.

Ben Barros

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November 15, 2010 in Virtual Property | Permalink | Comments (0) | TrackBack (0)

How can the ABA support PropertyProfs?

I am back from the fall leadership meeting of the ABA's Real Property, Trust and Estate Law Section.  If you teach property courses and aren't a member of the section, I highly recommend that you get involved.  Please feel free to e-mail me with any questions.

The main topic of discussion in the section's Legal Education Committee (chaired by Wilson Freyermuth) meeting this weekend was how the ABA, the Real Property section, and the committee in particular can support property professors with materials, ideas, and expertise.  Many good ideas were thrown around, but it was a small group, so we wanted to extend the discussion to the larger PropertyProf community.

1.  Can you envision any way that the ABA's Real Property section can support your efforts in the classroom?  Are there any materials that you desire that you have a difficult time finding?  Would it be helpful if members volunteered to serve as guest speakers to talk to your students about some aspect of their practice? 

2.  How could the ABA's Real Property section support new professors, or adjuncts teaching for the first time?

3.  We would eventually like to reach out to adjunct professors teaching real estate courses, but don't believe that a comprehensive list of such people exists.  (If it does, please let me know!)  It would help enormously if you could post a comment to this post or e-mail me directly with a list of the real estate courses at your school taught by adjuncts, the names of the people teaching those courses, and any contact information.

There are a lot of great people involved in the ABA's Real Property section, both practitioners and professors.  We'd love your input on ways that we can capitalize on that experience and energy for the benefit of all of our students!

Tanya Marsh

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November 15, 2010 in Teaching | Permalink | Comments (0) | TrackBack (0)

Sunday, November 14, 2010

The Next Phase of the Crisis: Will Investors Force Lenders to Buy Back Toxic Mortgage-Backed Securities?

It can be hard to keep track of all the poison spewed by the deregulated mortgage-backed securities industry.  The disaster runs so deep, and in so many directions, that it keeps cropping up in unexpected ways and places.  As we know, in lenders' frenzy to sell mortgage-backed securities to investors, they made mortgage loans to absolutely anybody with a pulse -- and even that might have been optional.Countrywide  Lenders couldn't have cared less about the loans people took on, because they got paid by securitizing the mortgages and selling the securities to investors.  The unethical goldrush was so frantic and slipshod that in many cases lenders never even properly documented the loans, which is why many foreclosures are now in limbo.

But the negligent record-keeping may have yet another consequence for both the lenders and those of us forced to bail them out.  Lenders packaged and securitized pools of mortgages, and sold those securities to investors, with the representation that if payments weren't made on the loans, losses would be recouped through foreclosures.  Now it appears that was a misrepresentation, since the lenders hadn't bothered to maintain records that would permit them to foreclose (in fact, in at least one case, it appears lenders sold securities in mortgages it didn't even own).  

Now, investors who purchased securities under that misrepresentation are demanding that at least one lender -- Bank of America, which now also owns the notoriously toxic assets of AIG and Countrywide Financial -- buy them back if they can't foreclose.  But if the lenders buy the securities back, they will increase their holdings of toxic assets.  Ssb guide to mbs That, of course, is what caused them to fail, setting off the economic crisis.  

So, we are left with three broad options: (1) tell investors, who purchased mortgage-backed securities under lenders' misrepresentations that they could foreclose, they have no recourse; (2) allow lenders to foreclose on homes when they don't have the proper documentation to do it; or (3) increase the toxic asset holdings of banks we already bailed out, and are still supporting.  

Meanwhile, the serious regulatory reforms intended to prevent a recurrence of this mess are in grave danger.  But hey, at least the bankers are doing well again.  Grrrrrrrrr.

Mark A. Edwards

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November 14, 2010 in Home and Housing, Mortgage Crisis | Permalink | Comments (1) | TrackBack (0)

The Cost of Big City Life

A story on the struggles of twenty-somethings to find affordable housing in New York (with a slide show):

To be sure, earlier generations had their share of hard-luck housing stories. But statistical evidence suggests that today’s new arrivals have a tougher struggle to live well, or even adequately, compared with their counterparts of just a decade ago. Battered by the one-two punch of persistent unemployment and the city’s high housing costs, they are squeezing into ever smaller spaces and living in neighborhoods once considered dicey and remote. They are doubling, tripling, quadrupling and even quintupling up.

Steve Clowney

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November 14, 2010 | Permalink | Comments (0) | TrackBack (0)