Law Commons^™

Mobilizing Public Markets To Finance Renewable Energy Projects: Insights From Expert Stakeholders, Paul Schwabe, Michael Mendelsohn, Felix Mormann, Douglas J. Arent

Felix Mormann

Financing renewable energy projects in the United States can be a complex, time consuming, and expensive process. Currently, most equity investment in new renewable power production facilities is supported by tax credits and accelerated depreciation benefits, and is constrained by the pool of potential investors that can fully use these tax benefits and are willing to engage in complex financial structures. For debt financing, non-government lending to renewables has largely been provided by foreign banks that may be under future lending constraints due to economic and regulatory conditions.

To discuss these and other renewable energy financing challenges and to identify …

Property And The True-Sale Doctrine.Pdf, Heather Hughes

Heather Hughes

Avenues To Foreign Investment In China’S Shipping Industry—Have Lease Financing Arrangements And The Free Trade Zones Opened Markets For Foreign Non-Bank Investment?, Rick Beaumont

Rick Beaumont

No abstract provided.

Turning A Blind Eye: Wall Street Finance Of Predatory Lending, Kathleen C. Engel, Patricia A. Mccoy

Patricia A. McCoy

No abstract provided.

Turning A Blind Eye: Wall Street Finance Of Predatory Lending, Kathleen Engel, Patricia Mccoy

Patricia A. McCoy

No abstract provided.

Turning A Blind Eye: Wall Street Finance Of Predatory Lending, Kathleen Engel, Patricia Mccoy

Patricia A. McCoy

Today, Wall Street finances up to eighty percent of subprime home loans through securitization. The subprime sector, which is designed for borrowers with blemished credit, has been dogged by predatory lending charges, many of which have been substantiated. As subprime securitization has grown, so have charges that securitization turns a blind eye to financing abusive loans. In this paper, we examine why secondary market discipline has failed to halt the securitization of predatory loans.

When investors buy securities backed by predatory loans, they face a classic lemons problem in the form of credit risk, prepayment risk, and litigation risk. Securitization …

Should The Mortgage Follow The Note?, John Hunt

John P Hunt

The law of mortgage assignment has taken center stage amidst foreclosure crisis, robosigning scandal, and controversy over the Mortgage Electronic Registration System. Yet a concept crucially important to mortgage assignment law, the idea that “the mortgage follows the note,” apparently has never been subjected to a critical analysis in a law review.

This Article makes two claims about that proposition, one positive and one normative. The positive claim is that it has been much less clear than typically assumed that the mortgage follows the note, in the sense that note transfer formalities trump mortgage transfer formalities. “The mortgage follows the …

Understanding The Development Potential Of Worker Remittance Securitization, Heather Hughes

Heather Hughes

Financial institutions are seeking to leverage the value of the cash that emigrant workers remit to their home countries. Specifically, banks in developing countries have securitized remittance cash flows. The size and stability of worker remittances have caused a surge of interest among financial institutions, academics and others in recent years. Remittance securitizations - or, issuances of remittance-backed bonds - present specific instances in which parties in remittance-receiving countries have actually harnessed the value of remittances in order to access capital markets. Remittance flow securitization can enable developing region banks to raise funds at advantageous rates. Because these future-flow transactions …

Certainty Of Title: Perspectives After The Mortgage Foreclosure Crisis On The Essential Function Of Effective Recording Systems, Donald J. Kochan

Donald J. Kochan

Recording systems for property play a pivotal, market-facilitating role for the players engaged in any transaction, the judiciary that must resolve disputes between the players, and others members of the general public by informing each about the true nature of ownership of the real property things in the world. This symposium article explores the essential character of such systems in providing certainty of title, and takes a tour through the mortgage foreclosure crisis to see where adherence to and respect for these systems’ roles broke down. Leading up to the crisis, as securitization became vogue and the housing boom blurred …

Adr's Place In Foreclosure: Remedying The Flaws Of A Securitized Housing Market, Lydia Nussbaum

Lydia R. Nussbaum

Millions of Americans lost their homes during the foreclosure crisis, an unprecedented disaster still plaguing local and national economies. A primary factor contributing to the crisis has been the failure of conventional foreclosure procedures to account for the new realities of securitization and the secondary mortgage market, which transformed the traditional borrower-lender relationship. To compensate for the shortcomings of conventional foreclosure procedures and stem the tide of residential foreclosure, state and local governments turned to ADR processes for a solution. Some foreclosure ADR programs, however, have greater potential to avoid unnecessary foreclosures than others. This article comprehensively examines the key …

The Dodd-Frank Wall Street Reform And Consumer Protection Act: What Caused The Financial Crisis And Will Dodd-Frank Succeed In Preventing Future Crises?, Charles W. Murdock

Charles W. Murdock

Summary: The Dodd-Frank Wall Street Reform and Consumer Protection Act: What Caused the Financial Crisis and Will Dodd-Frank Succeed in Preventing Future Crises?

We are still experiencing the devastating impact of the financial crisis which came to a head on September 18, 2008 when Secretary Paulson told Congressional leaders that “[u]nless you act, the financial system of this country and the world will melt down in a matter of days.”

To prevent future crises of this magnitude, last year Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act. However, this year, legislation has already been introduced to repeal …

Upper Level Courses: Three Exemplars, Kathy Heller, Mark Fagan, Tamar Frankel, Eric Gouvin

Kathy Z. Heller

This Article presents three exemplars of upper-level law school classes, and is divided into three parts. Part I discusses "Securitization and Asset-Backed Securities"; Part II discusses "Using Transactions to Teach Secured Transactions"; and Part III discusses "Teaching Deals Through a Focus on the Entertainment Industry.

Paying For Suburban Sprawl: Relating Commercial Finance Law To Environmental Harm, Heather Hughes

Heather Hughes

This Article relates contemporary financing practices to land use results on the ground. Demonstrating a relationship between financing practices and environmental consequences requires excavation of core questions about the scope and structure of the private law rules that comprise commercial finance law. Private law mechanisms such as rules governing common forms of financial transactions can relieve the tension between financial incentives driving commercial actors, on the one hand, and the goals of environmental regulation, on the other. This Article explores the relationship between one, typical form of real estate development finance – the securitized mezzanine loan – and one, major …

Participation And Disintermediation In A Risk Society, Robert J. Rhee

Robert Rhee

The chapter argues that financing extreme catastrophic loss will become more problematic as catastrophes become more frequent and severe. An effective strategy must increase the level of participation in the spreading of risk and loss. Currently, risk spreading is done largely through insurers and government as they are the default aggregators of private and public capital. An enlargement of participation may mean the disintermediation of the traditional insurance and public compensation functions, thus allowing more direct and efficient participation between those are exposed to risk and those who are willing to bear it. This chapter also argues that tax policy …

The Great Collapse: How Securitization Caused The Subprime Meltdown, Kurt Eggert

Kurt Eggert

This Article builds on existing criticism of securitizing subprime loans and argues that one of the primary causes of the subprime meltdown and the resulting economic collapse was the structure of securitization as applied to subprime and other non-prime residential loans, along with the resecuritization of the resulting mortgage-backed securities. Securitization weakened underwriting by discouraging originators from gathering “soft information” about the likelihood of borrower default and instead caused loan originators and other market participants to focus almost exclusively on such “hard information” as FICO scores and loan to value ratios. At each stage of the loan and securitization process, …

Testimony On 'Subprime Mortgage Market Turmoil: Examining The Role Of Securitization', Kurt Eggert

Kurt Eggert

This testimony, before the Senate Subcommittee on Securities, Insurance, and Investments, April 17, 2007, examines the role of securitization in the subprime market turmoil, describing how securitization atomized the lending process and turned over the de facto regulation of the subprime market to private entities such as rating agencies and investment banks. The testimony attributes the meltdown of the subprime market, the increased default rate and threat of rising foreclosures, as well as the difficulty of crafting an adequate response to that meltdown, to the effects of securitization. Securitization led to weakened and inconsistent underwriting standards and allowed many borrowers …

Turning A Blind Eye: Wall Street Finance Of Predatory Lending

Patricia A. McCoy

Today, Wall Street finances up to eighty percent of subprime home loans through securitization. The subprime sector, which is designed for borrowers with blemished credit, has been dogged by predatory lending charges, many of which have been substantiated. As subprime securitization has grown, so have charges that securitization turns a blind eye to financing abusive loans. In this paper, we examine why secondary market discipline has failed to halt the securitization of predatory loans.

When investors buy securities backed by predatory loans, they face a classic lemons problem in the form of credit risk, prepayment risk, and litigation risk. Securitization …

Comment On Michael A. Stegman Et Al.'S "Preventive Servicing Is Good For Business And Affordable Homeownership Policy": What Prevents Loan Modifications?, Kurt Eggert

Kurt Eggert

This comment describes the barriers to preventive servicing for securitized residential loans and assesses the importance of loan modifications, given the recent increases in default and foreclosure rates for subprime loans. Several hurdles slow or reduce such modifications, even those that help borrowers and investors alike. For example, self-interest may reduce servicers' willingness to modify loans rapidly.

In addition, underlying securitization agreements may impede servicers' ability and discretion in this area. Further, tax laws that govern a common securitization entity may limit modifications, as may accounting standards. Finally, "tranche warfare," the sometimes contradictory fiduciary duties servicers have toward investors holding …

Limiting Abuse And Opportunism By Mortgage Servicers, Kurt Eggert

Kurt Eggert

This article discusses the opportunistic and abusive behavior of some servicers of residential mortgages toward the borrowers whose loans they service. Such abuse includes claiming that borrowers are in default and attempting to foreclose even when payments are current, force-placing insurance even when borrowers already have a policy, and mishandling escrow funds.

The causes of such practices and the market forces that can rein them in are discussed. A case study of one mortgage servicer describes its unfair treatment of borrowers and the reforms imposed by federal regulators and other market participants. Both regulatory agencies and rating agencies appear to …

2003 Testimony On Securitization And Predatory Lending In A Hearing On 'Protecting Homeowners: Preventing Abusive Lending While Preserving Access To Credit', Kurt Eggert

Kurt Eggert

This 2003 Congressional Testimony warns of the dangers of securitizing subprime loans. After defining "predatory lending" and describing the process of securitization, it argues that securitizing subprime loans has many dangers. While some have claimed that securitizing loans lowers loan costs to borrowers, the reverse might be true and securitization may actually increase the costs of loans to borrowers. This testimony states that securitization undermines loan underwriting. As originators immediately sell their loans and so face less risk of loss even if a borrower defaults, the originators naturally will spend less time and effort screening potential loans for default, thus …

Held Up In Due Course: Predatory Lending, Securitization, And The Holder In Due Course Doctrine, Kurt Eggert

Kurt Eggert

This second article of a two-article set analyzes the conjunction of the holder in due course doctrine, securitization of residential mortgages and predatory lending. Predatory and deceptive lending, widely documented in the media and in Congressional and regulatory hearings, is the practice by unscrupulous lenders of originating loans at above-market rates through deceptive practices or undue influence or by taking advantage of the ignorance, desperation, or susceptibility to fraud of borrowers. These lenders have been targeting primarily elderly, poor and minority borrowers throughout the country. Even worse, these practices have been funded by Wall Street. This article explains how predatory …