Law Commons^™

Fair Lending 2.0: A Borrower-Based Solution To Discrimination In Mortgage Lending, Jared Ruiz Bybee

University of Michigan Journal of Law Reform

Fair lending laws promise that borrowers with similar credit profiles will receive similar loan products-regardless of their race. Yet, studies reveal that black and Latino borrowers consistently receive loan products that are inferior to those of white borrowers with similar credit characteristics. Despite frequent amendments since their passage during the Civil Rights Era, the Fair Lending Laws that opened doors for minority borrowers are unable to root out the subtle discrimination that persists in today's mortgage lending market. These traditional Fair Lending Laws are built on an outdated framework that focuses exclusively on punishing lenders and righting past wrongs. This …

Above All Else Stop Digging: Local Government Law As A (Partial) Cause Of (And Solution To) The Current Housing Crisis, Darien Shanske

University of Michigan Journal of Law Reform

So many things have gone wrong with our housing market that it is hard to know where to start. One simple diagnosis is that we invested too much in houses that were not worth as much as we thought. Looked at in this way, it is relatively easy to see how innovations like interest-only loans contributed to an over-valuation of housing. Certain actions of the federal government were and are also clearly problematic, such as the longstanding tax breaks for home ownership.

This Article looks at state and local government law, and particularly at financing mechanisms created by state law …

Facing The Facts: An Empirical Study Of The Fairness And Efficiency Of Foreclosures And A Proposal For Reform, Debra Pogrund Stark

University of Michigan Journal of Law Reform

Lenders view real estate foreclosures as too expensive and time consuming a process which needlessly increases the costs of making loans. Others complain that the foreclosure process fails to adequately protect the borrower's equity (the value of the property in excess of the debt secured by the property) in the mortgaged property.

This article tests these views by gathering new data on the fairness and efficiency of the foreclosure process. Based on the data collected (which confirms some assumptions but disproves others), the author proposes a reform of the foreclosure process to promote the interest of both lenders and borrowers. …

Curtailing The Economic Distortions Of The Mortgage Interest Deduction, William T. Mathias

University of Michigan Journal of Law Reform

Many Americans consider the mortgage interest deduction a necessary fixture of the American tax system. In this Article, Mathias examines the economic underpinnings of the deduction and finds that it cannot be justified on purely economic grounds. He then evaluates the major policy arguments for the mortgage interest deduction and concludes that it is inefficient, inequitable, and too costly in its present form to be justified on policy grounds. Finally, the author advocates for the elimination or substantial reduction in the size and scope of the mortgage interest deduction.

Eliminating The Labyrinth: A Proposal To Simplify Federal Mortgage Lending Discrimination Laws, Stephen M. Dane

University of Michigan Journal of Law Reform

The object of this Article is to demonstrate that the statutory and regulatory framework established by the federal government in its efforts to fight mortgage-lending discrimination is an extremely complicated labyrinth of dead ends, false passages, and elusive goals. Instead of addressing the mortgage-lending discrimination problem directly and comprehensively, Congress has taken a piecemeal and incomplete approach that generally has failed to bring the mortgage-lending industry into equal access compliance.

After pointing out the problems and deficiencies in the current statutory and regulatory scheme, this Article suggests a bold, comprehensive solution to the problem that, if implemented effectively, should ensure …

Alternative Mortgage Instruments: Authorizing And Implementing Price Level Adjusted Mortgages, Joel J. Goldberg

University of Michigan Journal of Law Reform

Of the institutions authorized to make mortgage funds available, only federally-chartered and a small minority of state-chartered savings and loan associations are presently authorized to make PLAM loans. This is due, in part, to a variety of legal and underwriting problems that may outweigh the theoretical advantages of PLAM financing. This Note evaluates these legal and underwriting problems and proposes legal measures to accommodate PLAM financing. Part I discusses the development and advantages of the PLAM. Part II analyzes the legal and practical underwriting objections to PLAM financing, including interest regulations, tax ramifications, and commercial desirability. Part II also suggests …

Selected Problems In Wrap-Around Financing: Suggested Approaches To Due-On-Sale Clauses And Purchaser's Depreciable Basis, Sanford M. Guerin

University of Michigan Journal of Law Reform

This article will address two unresolved issues surrounding the WA transaction which result from the inherent flexibility available for negotiating financing terms in the absence of an institutional lender. Part I discusses the circumstances warranting exclusion of the WA loan from the purchaser's depreciable basis. Part II addresses whether, and when, a due-on-sale clause in the senior mortgage should negate the possibility of utilizing WA financing.