Law Commons^™

The End Of Mortgage Securitization? Electronic Registration As A Threat To Bankruptcy Remotenes, John P. Hunt, Richard Stanton, Nancy Wallace

John P Hunt

A central tenet of asset securitization in the United States—that assets are bankruptcy remote from their sponsors—may be threatened by innovations in the transfer of mortgage loans from the loan-originators (sponsors) to the legal entities that own the mortgage pools (the Special Purpose Vehicles (SPVs)). The major legal argument advanced in the paper is that because the mortgage is an interest in real property, the bankruptcy-remoteness rules applicable to real property, including § 544(a)(3) of the Bankruptcy Code, create a risk to the bankruptcy remoteness of mortgage transactions unless proper recording occurs. We review the traditional mortgage transfer process and …

Credit Ratings In Insurance Regulation: The Missing Piece Of Financial Reform, John P. Hunt

John P Hunt

Many commentators, including the Financial Crisis Inquiry Commission, have identified the poor quality of credit ratings as an important cause of the recent financial crisis. The leading agencies all have acknowledged poor performance in some areas. One popular explanation for agencies’ poor performance is the incorporation of ratings into regulations. Rating-dependent regulation arguably reduces agencies’ incentives to do a good job (by creating artificial demand for ratings) and amplifies the negative effects of their doing a bad job (by creating regulatory consequences for rating downgrades).

Last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act apparently embraced this explanation wholeheartedly: …