PropertyProf Blog

Odinet on the Fannie Mae/Freddie Mac Mortgage Contract

Chris Odinet (Southern) has posted The Unfinished Business of Dodd-Frank: Reforming the Mortgage Contract (SMU Law Review) on SSRN.  Here's the abstract:

The standard residential mortgage contract is due for a reappraisal. The goals of Dodd-Frank and the CFPB are geared toward creating better stability in the residential mortgage market, in part, by mandating more robust underwriting. This is achieved chiefly through the ability-to-repay rules and the “qualified mortgage” safe harbor, which call for very conservative underwriting criteria to be applied to new mortgage loans. And lenders are whole-heartedly embracing these criteria in their loan originations — in the fourth quarter of 2015 over 98% of all new residential loans were qualified mortgages, thus resulting in a new wave of credit-worthy homeowners that are less likely than ever before to default. As a result of this and other factors, the standard form residential mortgage contract, with its harsh terms and overreaching provisions, should be reformed. This is necessary not only due to the fact that such terms should no longer be needed since borrowers are better financially positioned than in the past, but also because of a disturbing trend in the past few years where lenders and their third party contractors have abused the powers accorded to them by the mortgage contract — mostly through break-in style foreclosures. This Article argues for a reformation of the Fannie Mae/Freddie Mac standard residential mortgage contract and specifically singles out three common provisions that are ripe for modification or outright removal.

Beyond Blackacre: Blueunit?

Carol Rose has written:

“What is the symbol for property? It is easy to answer that land is that symbol…but why is land – immovable, enduring land – the central symbol for property?  Why not, say, water?  Water, after all, is in fact the subject of important and valuable property rights, and, indeed, concerns about water can substantially modify the rules about land.  If water was our chief symbol of property we might think of property rights - and perhaps other rights – in a quite different way.  We might think of rights literally and figuratively as more fluid and less fenced-in; we might think of property entailing less of the awesome blackstonian power of exclusion and more of the qualities of flexibility, reasonableness and moderation, attentiveness to others, and cooperative solutions to common problems.  Those qualities are in fact even a part of landed property – as in nuisance law – however little the symbol of landed property may suggest”. (Carol M Rose “Property as the Keystone Right?” (1996) 71 Notre Dame L Rev 329 at 351 – the New Zealand way of referencing!)

We might ask – is Rose’s view of land itself too monolithic a symbol?  “Land” means very different things in different contexts and at different times.  “Land” includes vast areas of farmland; various types of estates and interests; smaller blocks; and sometimes, buildings.  We might pause to reflect that the common example of “land” is a piece of land known as Blackacre.  But, why Blackacre? Why not Greenlease or Blueunit?  In fact, developments in the law of subdivision and land use, and the widespread development of “common interest communities” mean that Blueunit is – now and in the future – likely to be a far more important area for study than Blackacre.

For what of Blueunit?  The bundle of rights attaching to Blueunit will be very different from the bundle of rights attaching to Blackacre.  The type of exclusionary rights attaching to Blueunit will be different to those applying to Blackacre.  Simple factors such as the proximity of Blueunit A to Blueunit B; the fact that Blueunit A and Blueunit B may share a boundary that is a party wall; the fact that Blueunit A and Blueunit B may have to share payment for repair of a roof of a building which is not part of either of their but of other units within an apartment building; the fact that Blueunit A and Blueunit B may vote together or against each other in their owners’ corporation or body corporate.  The owners of units may be neighbours in much more of a sense than the owners of "acres".

Blueunit needs much more attention.   

Thomas Gibbons

Introduction

Hello All,

Steve's introduction probably says it all, though it should have been "Australasian law journals (mostly NZ really)".

My recent work has appeared (or is forthcoming) in a balance of professional and academic journals - first point of comparison: New Zealand essentially doesn't have student-edited law reviews.  There are what you might call "bar journals" (mostly for the profession) and "refereed journals" (which are refereed, generally on a blind peer-review basis).  Some journals are student-edited in the sense of citation-checking, etc, but most publication decisions are made by faculty members. 

My forthcoming academic articles are on "property rights in resource consents: some thoughts from law and economics" and a "response" article on issues with remedial schemes for leaky buildings, taking into account ideas from gridlock and the role of morale in property rights.  Professional articles have been on body corporate AGM's (governance of common interest communities, sort of), and management agreements for bodies corporate (management of common interest communities, sort of).

My interest in unit titles deserves a bit of an introduction.  These are called "strata titles" in Australia, and the nearest US comparison is probably with condominiums, but NZ law has become particularly prescriptive and is probably less flexible than US law in this area.  I hesitate to use the phrase "common interest communities" because unit titles are a particular type of title/ownership/governance - very different to say a fee simple subdivision, even though in particular instances both/neither may relate to gated communities, or private infrastructure, etc.  A recent book with an NZ connection has used the term "Multi-Owned Housing", but I don't think that is quite right either, because many of the unit titles issues relate to mixed-use developments (commercial, residential, retail, etc).

I am particularly interested in the intersection (good academic word) of unit titles with administrative law, company law, and broader ideas of property theory.

Finally, my "day job" is as a director (aka partner, but we incorporated pursuant to an NZ law change) of a mid-size law firm.  My practice covers both company/commercial and property law, as well as the management and other responsibilities of being in this role. 

Also, I am guest lecturing securities law at the University of Waikato this semester.  Interestingly (by way of comparison) NZ is seeing a complete overhaul of securities law after the GFC - but property law is essentially untouched (no greater regulation of mortgagees, foreclosure, etc).

That's enough introduction for now.  Other posts will hopefully be more substantive.

Thomas Gibbons

 

What If Nobody Will Serve on the Homeowners Association Board?

The L.A. Times does some digging.  The short answer: "To encourage volunteerism, [California law] provides that an officer or director is protected from personal liability when certain other conditions are met, including not receiving any salary and carrying the required insurance. Without a board, the entire membership is subject to liability should" soemthing happen.

Steve Clowney