Law Commons^™

Bringing It All Back Home: How To Save Main Street, Ignore K Street, And Thereby Save Wall Street, Robert C. Hockett

Robert C. Hockett

No abstract provided.

The Subprime Market Roller Coaster, Willa E. Gibson

Akron Law Faculty Publications

Please find attached an essay entitled “The Subprime Market Roller Coaster.” The essay discusses the economic and societal implications of the subprime market losses with an emphasis on the federal regulators’ inability to curtail such losses. It discusses collateralized mortgage obligations and how these debt securities fueled the subprime market. The essay discusses how each of the players – lenders, debtors, investment bankers, securities firms and investors – speculated on homes whose values were a mere illusion. It describes how each party along the chain starting with the lender used basic risk-shifting principles to engage in reckless speculation assuming they …

A Tale Of Three Markets: The Law And Economics Of Predatory Lending, Kathleen Engel, Patricia Mccoy

Patricia A. McCoy

Predatory lending - the practice of making exploitative high-cost loans to naive borrowers - has spurred policy-makers, activists, lenders and scholars to debate whether intervention is warranted and, if so, what type of intervention is appropriate. The solution requires understanding the incentives in the home mortgage market that have fueled predatory lending. Recent changes in the credit market have created new possibilities for lenders to profit by exploiting information asymmetries to the detriment of unsophisticated borrowers. As a result, a new, predatory lending market has emerged alongside the legitimate prime and subprime home mortgage markets. Neither market forces nor existing …

Mers Remains Afloat In A Sea Of Foreclosures, Shelby D. Green

Elisabeth Haub School of Law Faculty Publications

Despite the simple premise of the MERS System, opponents--or those simply trying to invalidate or forestall enforcement of their mortgages--have leveled various challenges to MERS's practices and even its basic business model. Taking an aerial view of the challenges, it is possible to discern a certain pattern as one challenge seemed to morph into the next (often following rejection of the earlier one in the courts). Some borrowers have asserted that MERS lacked legal standing to foreclose because it was a mere nominee and not the owner of the note. Even if MERS's legal standing was upheld, borrowers pointed to …

Save The Economy: Break Up The Big Banks And Shape Up The Regulators, Charles W. Murdock

Charles W. Murdock

Save the Economy: Break Up the Big Banks and Shape Up the Regulators

The U.S. economy is still reeling from the financial crisis that exploded in the fall of 2008. This article asserts that the big banks were major culprits in causing the crisis, by funding the non-bank lenders that created the toxic mortgages which the big banks securitized and sold to unwary investors. Paradoxically, banks which were then too big to fail are even larger today.

The article briefly reviews the history of banking from the Founding Fathers to the deregulatory mindset that has been present since 1980. It …

"On The Take": The Black Box Of Credit Scoring And Mortgage Discrimination, Cassandra Jones Havard

All Faculty Scholarship

Subprime credit, a relatively new method of risk-based pricing, has been hailed as a way to open up markets and provide access to credit to those who would otherwise be excluded. Evidence suggests that subprime mortgage segmentation increases rather than reduces exclusionary practices in lending. Furthermore, what is unclear is how lenders determine who qualifies as a subprime borrower. This concern became manifested when studies demonstrated that minority borrowers, regardless of creditworthiness, are more likely to receive expensive, sub-prime loans. The disparity is properly attributed to lenders’ credit pricing policies which included discretionary increases despite the objectively-determined risk-based interest rate …

Otc Derivatives Trading Under The Financial Reform Bill: Is It Tough Enough?, Willa E. Gibson

Willa E Gibson

This paper discusses the regulatory framework devised by Congress to govern trading in OTC derivatives products with a goal toward assessing the efficiency of the legislation to prevent systemic loss in the financial markets from derivatives trading. Both the U.S. House of Representatives and the U.S. Senate have drafted financial reform legislation prompted by the financial market failings the country experienced in 2008. Both versions provide for comprehensive regulation of the OTC derivatives products, which were used extensively by those financial institutions that lost millions of dollars from investments in mortgage securities to insure against subprime mortgage defaults. This paper …

Renters Evicted En Masse: Collateral Damage Arising From The Subprime Foreclosure Crisis, Creola Johnson

Creola Johnson

ABSTRACT: America is experiencing its worst foreclosure crisis in history, and tenants are the silent victims of this crisis. In this Article, Professor Johnson describes the consequences of thousands of tenants of being evicted from residential properties obtained by lenders in foreclosure proceedings against the owners-landlords. The individual consequences include tenants’ renting substandard alternative housing, experiencing disruptions in family life, and even becoming homeless. Societal consequences include the costs imposed upon communities to provide social services to the evicted tenants and their families and the burden on cities in dealing with homes left vacant due to the lenders' inability to …

Women And Subprime Lending: An Essay Advocating Self-Regulation Of The Mortgage Lending Industry,Symposium On Law As Transformative Agent: Thinking And Doing Law In New Categories, Carol N. Brown

Law Faculty Publications

The subsequent national mortgage foreclosure crisis that seemed almost 5 uncontrollable by 2007 ignited a mortgage-related financial crisis that affected the global market place. News media, business reports, government investigations, 6 regulatory inquiries, and citizen suits focused national attention on the housing crisis and the problems attending what soon came to be known as the “mortgage meltdown.” A dual mortgage market had emerged in which subprime lending 7 disproportionately affected minorities (particularly blacks and Hispanics), women, and the elderly.8 Evidence of the disparate impact felt by certain minority borrowers is abundant and the evidence of gender disparities in subprime lending …

Bringing It All Back Home: How To Save Main Street, Ignore K Street, And Thereby Save Wall Street, Robert C. Hockett

Cornell Law Faculty Publications

No abstract provided.

Legal And Policy Choices In The Aftermath Of The Subprime And Mortgage Financing Crisis, Gerald Korngold

South Carolina Law Review

No abstract provided.

Keynote Address: Understanding The Subprime Financial Crisis, Steven L. Schwarcz

South Carolina Law Review

No abstract provided.

Responding To The Subprime Mess: The New Regulatory Landscape, David Schmudde

Fordham Journal of Corporate & Financial Law

No abstract provided.

The Great American Housing Bubble: Re-Examining Cause And Effect, Robert M. Hardaway

Sturm College of Law: Faculty Scholarship

The current quest to identify scapegoats upon whom to cast blame for the housing bubble collapse are fundamentally misdirected inasmuch as all bubbles, like all Ponzi schemes, inevitably collapse-the only question being one of timing. Focus should instead be placed on the causes of the bubble itself, for only by doing so can sound economic policies be devised in a manner that will prevent future bubbles. Primary causes of the creation of the housing bubble are extravagant house subsidies lavished disproportionately on the top tiers of income earners; restriction of the supply of housing through local exclusionary policies; social policies …

The Subprime Market Roller Coaster, Willa E. Gibson

Willa E Gibson

Please find attached an essay entitled “The Subprime Market Roller Coaster.” The essay discusses the economic and societal implications of the subprime market losses with an emphasis on the federal regulators’ inability to curtail such losses. It discusses collateralized mortgage obligations and how these debt securities fueled the subprime market. The essay discusses how each of the players – lenders, debtors, investment bankers, securities firms and investors – speculated on homes whose values were a mere illusion. It describes how each party along the chain starting with the lender used basic risk-shifting principles to engage in reckless speculation assuming they …

The Subprime Mortgage Crisis: Will It Change Foreign Investment In Us Markets?, Lindsay Joyner

South Carolina Journal of International Law and Business

No abstract provided.

A Tale Of Three Markets: The Law And Economics Of Predatory Lending

Patricia A. McCoy

Predatory lending - the practice of making exploitative high-cost loans to naive borrowers - has spurred policy-makers, activists, lenders and scholars to debate whether intervention is warranted and, if so, what type of intervention is appropriate. The solution requires understanding the incentives in the home mortgage market that have fueled predatory lending. Recent changes in the credit market have created new possibilities for lenders to profit by exploiting information asymmetries to the detriment of unsophisticated borrowers. As a result, a new, predatory lending market has emerged alongside the legitimate prime and subprime home mortgage markets. Neither market forces nor existing …