Thursday, February 16, 2012

A Superb Report on Foreclosure Non-Compliance and Fraud, Well Worth Your Time

The City of San Francisco has released a wonderful, empirical study of foreclosure non-compliance and fraud, based on a forensic survey of 400 foreclosures in the recent past.  It is so well-written, and explains the foreclosure process and the mortgage-backed securities industry so succintly, that it would be a superb addition to a first year property law course.

The study finds that in 84% of the foreclosures in its sample, there was at least one clear violation of California law, and most often more than one.  Many (if not most) of these violations would render the foreclosures invalid.

The only questions now are (1) whether the wrongfully foreclosed upon can find some measure of justice through private claims; (2) whether we can put in place a system of law that prevents this from happening again and (3) how we can trust the validity of title going forward, since in many cases two centuries worth of record-keeping has been broken.

Mark A. Edwards

February 16, 2012 | Permalink | Comments (1) | TrackBack (0)

Trademark Your Baby

Beyonce and Jay-Z welcomed a baby girl on January 7 and named their bundle-of-joy Blue Ivy Carter.  A few weeks ago the business-savvy couple applied for a trademark on her name.  Slate has a short piece on the ins & outs of trademarking a (famous) name.

Steve Clowney

February 16, 2012 | Permalink | Comments (0) | TrackBack (0)

Layard on Localism and the Regulation of Multiple Occupancy Housing

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Antonia Layard (Cardiff) has posted Law and Localism: The Case of Multiple Occupancy Housing (Legal Studies) on SSRN.  Here's the abstract:

This paper investigates how planning regulation constructs the local, encapsulating a locality and prioritizing local decision-making over regional and national scales. It draws on a case study of the regulation of multiple occupation to make three inter-related points. First, the analysis emphasizes the plurality of ‘locals’ and the interrelationships between them. Second, the paper explains how the justification of the local is required to make a locality legally visible. This operationalization and construction of the local (legally, spatially and socially) must take place before the political logic of localism, the prioritization of local decision-making over other scales of governance, can take legal effect. Third the paper explains how, once the ‘local’ is legally constructed and can make decisions, this prioritization of apparently neutral local expertise and knowledge can act to enclose the spatial and social with sometimes powerful exclusionary and regressive effects.

Steve Clowney

February 16, 2012 | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 15, 2012

Beauty v. Efficiency

In the Economist, Ryan Avent makes the case that we're too concerned with how our cities look:

[P]eople view the built environment as primarily aesthetic in nature. Most of us live in one building and work in another, and almost every other structure in the city is essentially decoration for our lives; I've been in a lot of Washington buildings, but my primary interaction with the vast majority of Washington structures is a street-level view of their exterior. The nature of this interaction is such that we underappreciate the built environment as an input to production.

Steve Clowney

February 15, 2012 | Permalink | Comments (0) | TrackBack (0)

Make No Small Plans

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A slideshow of the largest structures in the world.

Steve Clowney

(pic: The world's largest church)

February 15, 2012 | Permalink | Comments (0) | TrackBack (0)

Somin on Kelo

Somin
Ilya Somin (George Mason) has posted What If Kelo V. City of New London Had Gone the Other Way? (Indiana Law Review) on SSRN.  Here's the abstract:

Kelo v. City of New London is one of the most controversial decisions in U.S. Supreme Court history. The Kelo Court held that the Public Use Clause of the Fifth Amendment allows government to condemn private property and transfer it to other private parties for purposes of “economic development.” This Article considers the question of what might have happened if the Supreme Court decided Kelo v. City of New London in favor of the property owners. Such counterfactual analysis may seem frivolous. But it is, in fact, useful in understanding constitutional history. Any assessment of the impact of a legal decision depends on at least an implicit judgment as to the likely consequences of a ruling the other way. Analysis can be improved by making these implicit counterfactual assumptions clear and systematically considering their implications.

Part I briefly describes the Kelo case and its aftermath, focusing especially on the massive political backlash. That backlash led to numerous new reform laws. However, many of them turned out to be largely symbolic. Part II discusses the potential value of a counterfactual analysis of Kelo. It could help shed light on a longstanding debate over the effects of Supreme Court decisions on society. Some have argued that court decisions have little impact, mostly protecting only those rights that the political branches of government would protect of their own accord. Others contend that this pessimistic view underrates the potential effect of Supreme Court decisions.

Part III considers the possible legal effect of a ruling in favor of the property owners. Such a decision could have taken several potential forms. One possibility is that the Court could have adopted the view advocated by the four Kelo dissenters: that economic development condemnations are categorically forbidden by the Public Use Clause. This would have provided strong protection to property owners and significantly altered the legal landscape. On the other hand, the Court could easily have decided in favor of the property owners on one of two narrower grounds. Such a ruling would have led to much weaker protections for property owners.

Part IV weighs the potential political impact of a decision favoring the property owners. Such an outcome might have forestalled the massive political backlash that Kelo caused. Ironically, a narrow ruling in favor of the owners that did not significantly constrain future takings might have left the cause of property rights worse off than defeat did. On the other hand, a strong ruling categorically banning economic development takings would likely have done more for property rights than the backlash did, especially considering the uneven nature of the latter. Furthermore, political movements sometimes build on legal victories, as well as defeats, as happened in the case of the Civil Rights movement in the wake of Brown v. Board of Education. It is possible that property rights advocates could have similarly exploited a victory in Kelo.

Steve Clowney

February 15, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 14, 2012

A Fishing Tragedy

Cod

According to the New York Times, a classic tragedy of the commons story looks set to wipe out the cod fishing industry in Massachusetts. Recently released data show that the fish is "so severely overfished that even if all fishing on it ended immediately, it would not rebound by 2014 to levels required under federal law." 

In response to these numbers, the fisheries arm of the National Oceanic and Atmospheric Administration proposed cutting the cod take by 82 percent cut.  A reduction of this size would destroy much of the industry, so the fisherman have lobbied for less drastic measures.  The NOAA has now signaled that it will adopt a one-year emergency measure and only mandate a 22 percent cut.  That's great for the fishermen and their families, but doesn't do much for the long term health of America's fisheries.  Enjoy your New England cod this year -- it doesn't look like we have the political will to save them. Also, someone should probably start brainstorming a new name for Cape Cod.  Maybe Cape "Garrett Hardin Was Right"?

Steve Clowney

(photo: from flickr user Chris Blanar)

February 14, 2012 | Permalink | Comments (0) | TrackBack (0)

Stein on Palazzolo v. Rhode Island

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Gregory Stein (Tennessee) has posted The Modest Impact of Palazzolo v. Rhode Island (Vermont Law Review) on SSRN.  Here's the abstract:

Before 2001, state and federal courts did not agree on the extent to which a property owner’s regulatory takings claim should be weakened by the existence of legal restrictions on her use of the property at the time she acquired it. The Palazzolo Court addressed this doctrinal confusion but did not completely resolve it, offering six opinions that partially contradict each other. Some of this discord has persisted, with Palazzolo already cited in nearly five hundred judicial opinions, and not always consistently.

This Article examines the impact Palazzolo has had on state and lower federal courts. After reviewing the law before Palazzolo and the Supreme Court’s decision in that case, the Article offers suggestions as to how courts ought to interpret the contradictory opinions in Palazzolo. More specifically, cases arising at different points in the ripening process should be treated differently, and only a small subset of takings claims should benefit from Palazzolo’s relaxation of the notice rule.

Next the Article assesses the evidence, in an effort to determine whether courts interpreting Palazzolo have actually been following these suggestions. First, it examines the small number of claims in which an owner that probably would have lost before 2001 prevailed. It then compares these results with the far more numerous cases in which an owner that probably would have lost before 2001 still lost even after that decision.

The Article closes by offering a more generalized assessment of the effects of Palazzolo. It concludes that nearly all of the courts to cite Palazzolo have heeded its requirements, but only a few cases have turned out differently than they would have before 2001. The Court’s ripeness rules dictate that few landowners should benefit from the holding in Palazzolo, and only a small number actually do benefit. Lower courts understand Palazzolo, they have been applying it correctly, and they should continue to do what they have been doing.

Steve Clowney

February 14, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, February 13, 2012

Does the Dukeminier & Krier Get the Mortgage Crisis Wrong?

The following is a guest post from Rebecca Tushnet of Georgetown.  Check out her impressive scholarly contributions here. Also, if you're interested in false advertising and other IP issues, then you really should follow her blog.  Without further ado:

I recently started teaching the subprime mortgage crisis in my first-year Property class. We use Dukeminier et al., though I’ve supplemented with a bunch of other material, in part because the book came out in 2010.  When I was preparing the syllabus, I’d planned to teach McGlawn v. Pennsylvania Human Relations Commission, 891 A.2d 757 (Commonwealth Ct. Penn. 2006), which I found out about in the excellent book Integrating Spaces: Property Law and Race. But then I saw that the most recent edition of the Dukeminier casebook had added a new section on subprime mortgages that contained Commonwealth v. Fremont, on which McGlawn relies for principles about what subprime loans were unfair, so—busy and trusting—I put Fremont on the syllabus instead.

Here’s the thing: McGlawn introduces students to a number of actual victims of predatory lending, including the financial and emotional losses they suffered, while Fremont simply recites the predatory features of the loans, making it harder to see why we should care.  Then, in the questions following the case, the Dukeminier casebook asks why consumers took these terrible loans.  It cites some law & economics scholarship and some behavioral economics, suggesting that the problem was excessive consumer optimism (as opposed to, in McGlawn, a fair amount of pure fraud as well as misunderstanding). 

What the casebook doesn’t ask is why lenders made these terrible loans.  The questions we ask influence the answers we get.  It’s also notable that the casebook only asks about the consumers in a paragraph that suggests (contrary to all credible evidence) that the Community Reinvestment Act had some causative relationship to the subprime crisis.

The casebook additionally says in the same paragraph, “Because a large proportion of home mortgage loans are sold into the secondary mortgage market, most equitable defenses are unavailable to homeowners as a result of the holder-in-due-course doctrine.”  Most students won’t really know what that means; I’ve found that they are disturbed enough by the concept of void versus voidable title—which shows up earlier in the course in the O’Keefe v. Snyder case.  But it may be worth telling students that this statement—the foundation of securitization of mortgage loans—is not as certain as the casebook presents it.  Among other things, if the note and mortgage were actually assigned in order to perform the foreclosure after the loan went into default (which wasn’t supposed to be the sequence but apparently often was), it’s not clear why the holder is a holder in due course with no notice of the problem with the underlying debt.

I don’t think Dukeminier et al. is an evil casebook, nor do I think that the authors consciously chose to strip out the homeowner-victims in order to reduce them to people who made bad bets and must inevitably suffer the consequences. (And many of the chain of title problems were just coming to light in 2010, which explains why they aren’t in the casebook.)  But case selection and questions asked of students have powerful effects on what new lawyers think of as the baseline of the law, and this new section in the casebook is a good example.

Rebecca Tushnet

February 13, 2012 in Mortgage Crisis | Permalink | Comments (4) | TrackBack (0)

Could Better Urban Planning Have Prevented the Mortgage Crisis?

Last Firday, Architect Jeanne Gang and scholar Greg Lindsay penned an opinion piece in the New York Times, arguing that more thoughtful architecture and urban design may have forestalled the housing meltdown:

[B]etter design is precisely what suburban America needs, particularly when it comes to rethinking the basic residential categories that define it, but can no longer accommodate the realities of domestic life. Designers and policy makers need to see the single-family house as a design dilemma whose elements — architecture, finance and residents’ desires — are inextricably linked.

Steve Clowney

February 13, 2012 | Permalink | Comments (0) | TrackBack (0)

Mossoff on the The False Promise of the Right to Exclude

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Adam Mossoff (George Mason) has posted The False Promise of the Right to Exclude (Econ Journal Watch) on SSRN.  Here's the abstract:

This essay, written for the Econ Journal Watch symposium, “Property: A Bundle of Rights?,” addresses a dispute among the critics of the “bundle” conception of property: does defining the core essence of property as the right to exclude avoid the disintegrating effects of the bundle conception? Thomas Merrill and Henry Smith believe so, and they have developed an extensive literature modeling how their “exclusion conception of property” achieves determinacy and information-cost efficiencies in property law. This essay contends that this is a false promise. Merrill and Smith are correct that the bundle conception is wrong, but their model of how the right to exclude functions in practice -- what they call the “exclusion strategy” -- does not account for the majority of property doctrines raised in real-world lawsuits. Despite the emphasis on trespass and conversion doctrines within academic scholarship, most property disputes are not situations in which a property-owner seeks to exclude a stranger from one’s land or chattel; rather, most property disputes arise from sustained and substantial ex ante relationships between individuals concerning the use, possession or disposition of a valued asset or resource. Merrill and Smith claim that these "governance strategies" function only at the "periphery" of property law, but in practice this is simply not true, including even in trespass cases, which supposedly represent the exclusion strategy par excellence. This essay briefly explores this insight by detailing how the exclusion conception of property fails to account fully for this heterogeneity in real-world property disputes, Although the elegant reductionism of the exclusion conception of property makes it theoretically appealing, lawyers and economists should be wary of its promise of determinacy in saving property from the disintegrative effects of the bundle conception.

Steve Clowney

February 13, 2012 | Permalink | Comments (0) | TrackBack (0)

Friday, February 10, 2012

Reaction to the Mortgage Foreclosure Settlement

Following up on Mark's posts, Matt Yglesias from Slate has some reactions to the foreclosure fraud settlement.  He gives a brief background on the case, then argues that the settlment ($26 billion) was too small and that the government missed a chance to push for large scale reform/destruction of the big banks:

I don't want to be the kind of guy who sniffs at a $26 billion settlement, but the reality is that's a relatively small amount of money. It's small relative to the $250 billion (nominal) tobacco settlement from the late 1990s. Certainly it's small relative to the $700 billion in total underwater mortgage debt outstanding in the United States.

Steve Clowney

February 10, 2012 | Permalink | Comments (0) | TrackBack (0)

This Land is Your Land

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In honor of the 30th anniversary of the Falkland Islands war, here's a slideshow of ten little-known international disputes over territory.  All good Americans should stand ready - you never know when our struggle with Tokelau over the future of Swains Island could escalate.

Steve Clowney

(Pic: Swains Island, claimed by both the U.S. and Tokelau.  Note the village of Talauga on left, which is home to all 37 residents of Swains Island.)

February 10, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, February 9, 2012

Fun Game: Could Your AG Be Bothered to Compose Her Own Quotes?

Today's foreclosure fraud settlement apparently came with a handy press release template for all the State AGs.  Someone leaked it.  Compare the template to what your AG announces by running a Google news search.  It's fun!

Here's part of the template:

“This agreement is very significant in how it addresses the fraud that these banks committed against many homeowners across our state,” said ___.“This agreement not only provides much needed relief to (STATE) borrowers,but it also puts a stop to many of the bad behaviors that contributed to the mortgage mess in our state and across the country.”

And by God, here's News 8 KCCI.com in Des Moines, Iowa, with a hard-hitting report quoting AG Tom Miller on the deal:

"This agreement is very significant in how it addresses the fraud that these  banks committed against many homeowners across Iowa," said Miller.  "This  agreement not only provides badly needed relief to Iowa borrowers, but it also  puts a stop to many of the bad behaviors that contributed to the mortgage mess  throughout Iowa and across the country." 

"in how"?  Come on, fake quote generators --you're making the AGs look bad!

Makes you wonder if robo-signing really seemed that bad to the AGs.

If you find a similar quote from your AG, post it in the comments!

Mark A. Edwards

February 9, 2012 | Permalink | Comments (4) | TrackBack (0)

Foreclosure Fraud Settlement Demonstrates the Power of Capital Relative to the State

Let's say I hire an armed gang to expel you from your house.  My gang removes all of your belongings, changes the locks, and warns you that you'd better not try to come back.  I then sell your house to someone else. 

You might have called the police, but the armed gang I hired actually are the police.  You might have gone to court to stop me, but the court is on my side, because I deliberately mislead the courts.

Now let's say I did the same thing thousands and thousands of times to other people as well.

And you can prove it.

I'd be in pretty big trouble, wouldn't I?  And you'd be entitled to a pretty substantial damages award, wouldn't you?

Not if I'm Bank of America or Wells Fargo.  Then, I simply negotiate from my position of incredible strength, relative to both the state and the individual, and move on.

$1500 to $2000 per home.  That's what people who were wrongfully driven from their homes at gunpoint get under the settlement agreement.  I suppose it will go to the estates of the ones who committed suicide. 

 

 

 

As Yves Smith points out over at Naked Capitalism, $1500-2000 is less than the legal expenses banks incur when a foreclosure is challenged.  It's less than title insurance on homes worth over $200K.

Do you remember that scene in a Tale of Two Cities, when the rich man's carriage, speeding through the marketplace, runs down and kills a young boy?  He throws a coin out the window of the carriage and moves on.  That's the settlement agreement.

And the saddest thing is that it makes no sense to be angry with the attorneys general for reaching this agreement.  Given the power differential, they did the best they could.

At least they didn't negotiate away civil suits by private parties -- although they will be much harder to bring, because states will be closing their civil investigations.

Mark A. Edwards

 

February 9, 2012 | Permalink | Comments (0) | TrackBack (0)

Grading Miami's New Urbanist Experiment

In 2009, Miami became the first major American city to adopt a New Urbanist zoning code.  Sean McCaughan of The Architect's Newspaper reviews the highs and lows of the code's first three years.  McCaughan critiques the plan's inability to address public transportation, parking requirements, and ugly public buildings.  On the positives side, McCaughan argues that the code strengths are "urban infill, density, and the vitality of the pedestrian experience at the neighborhood level."

Steve Clowney

February 9, 2012 | Permalink | Comments (0) | TrackBack (0)

Wolf on "Green Zoning"

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Michael Wolf (Florida) has posted A Yellow Light for "Green Zoning": Some Words of Caution About Incorporating Green Building Standards into Local Land Use Law (The Urban Lawyer) on SSRN.  Here's the abstract:

The focus of this essay is a growing practice to which we can attach the label “Green Zoning” — the incorporation of LEED and competing privately generated standards into local government law, as part of the existing zoning or land use ordinance, or as a free-standing green building ordinance. After reviewing some of the pertinent literature on this topic, this essay will highlight and provide illustrations of six problems with Green Zoning practices: 1. The Delegation Problem — Can and should local laws be based on a moving target (standards set by private parties that continue to change and evolve)? 2. The Compatibility Problem — Are some green building standards inconsistent with good planning practices? 3. The Expertise Problem — Are already overburdened local officials up to the task of incorporating, administering, and overseeing Green Zoning? 4. The Eco-Political Problem — How or should local officials factor in the battles waged over green building standards? 5. The Laboratory Problem — Are variations from locality to locality a good idea, or do state standards make more sense in this area? 6. The Philosophical Problem — What role should builders, architects, and industry experts play in shaping zoning and planning ordinances?

Steve Clowney

February 9, 2012 | 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)

Map of the Day: The Other Side of the Globe

When you were younger did you ever dream of "digging a hole to China" in your backyard?  Well, it turns out that if you live in the U.S. you wouldn't have ended up anywhere near Beijing, even if you had figured out how to dig through the Earth's molten core.  This map tool allows you to see what's on the other side of the globe from where you live.  Click on the link and put your hometown in the middle of "map 1."  The second map shows what's across the globe.  Spoiler Alert: The answer is less exciting than you think. 

Steve Clowney

February 8, 2012 | Permalink | Comments (0) | TrackBack (0)

The Reverse Mount Laurel Doctrine

The always-interesting Ken Stahl highlights a recent land use case out of New Jersey.  In Sayreville v. 35 Club, the New Jersey Supreme Court held that the first amendment does not necessarily require a  municipality to allow the sitting of adult businesses, so long as adult ventures have adequate access to locations elsewhere in the metro region (even if those locations are across state borders).

Stahl dubs this "the bizarro Mount Laurel Doctrine" and argues that it has the potential to create new red light disctricts. He writes, "Those communities that have permitted land uses deemed undesirable by other communities, perhaps out of a willingness to absorb their fair share, will be branded as red-light districts or ghettos and become dumping grounds for undesirable uses, while those that have guarded their exclusiveness most zealously will get to continue doing so for no better reason than that they always have."

Steve Clowney

February 8, 2012 in Land Use | Permalink | Comments (0) | TrackBack (0)