Law Commons^™

Proposal For A National Mortgage Registry: Mers Done Right, A , Dale A. Whitman

Missouri Law Review

In this Article, Professor Whitman analyzes the existing legal regime for transfers of notes and mortgages on the secondary market, and concludes that it is highly inconvenient and dysfunctional, with the result that large numbers of market participants simply did not observe its rules during the huge market run-up of the early and mid-2000s. He also considers Mortgage Electronic Registration System (MERS), which was designed to alleviate the inconveniences of repeatedly recording mortgage assignments, but concludes that it was conceptually flawed and has proven to be an inadequate response to the problem. For these reasons the legal system was ill-prepared …

Community Collateral Damage: A Question Of Priorities, Andrea Boyack

Faculty Publications

Today’s soaring mortgage default rate and the uncertainty and delay associated with mortgage foreclosure proceedings threatens to cause financial tragedies of the commons in condominiums and homeowner associations across the country. Assessment defaults in privately governed communities result in an inequitable allocation of upkeep costs, and current law provides no way to prevent this spillover effect. But the collateral damages caused by delayed foreclosures and insufficient recoveries can be minimized by gradually increasing the priority position of the association lien.

In a majority of states, association liens are completely subordinate to the first mortgage lien. At foreclosure of the mortgage …

Laudable Goals And Unintended Consequences: The Role And Control Of Fannie Mae And Freddie Mac, Andrea Boyack

Faculty Publications

The United States is struggling to emerge from an era of loose mortgage underwriting standards – lapses in credit analysis that led to origination and securitization of toxic loans. The fallout has been crippling, costing borrowers their homes, investors their money, and the government its taxes.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) passed last summer was the first comprehensive effort to address the problems in the system that led – in sequence – to the subprime crisis, the housing crisis, and the financial crisis. The Dodd-Frank Act, which contains over 2,300 pages of legislation, …

Keeping Pace: Federal Mortgage Lenders Halt Local Clean Energy Programs, Ian M. Larson

Missouri Law Review

This Law Summary analyzes and comments upon the legal arguments put forth by supporters and critics of PACE liens in the wake of the July 2010 disputes. Part H discusses the origins of PACE in 2008 and its rapid expansion across the United States, paying particular attention to the passage of PACE legislation in Missouri. Part III analyzes the escalating dispute between PACE supporters and the federal mortgage lenders who oppose it, commenting upon the legal arguments articulated by both sides. Part IV proposes a resolution to the conflict that provides a more secure position for federal mortgage groups while …

Fannie Mae/Freddie Mac Uniform Mortgage Instruments: The Forgotten Benefit To Homeowners, Julia Patterson Forrester

Missouri Law Review

Part II of this Article discusses Fannie Mae and Freddie Mac, their creation and evolution, their current role in the secondary market, and the development and current use of the Fannie Mae/Freddie Mac standardized forms. Part III looks at these uniform mortgage instruments in detail, and compares them to other residential loan documents and to commercial mortgage loan documents. Part III also considers typical terms of other consumer transactions that are not so balanced and explores how the problems that consumers face in choosing consumer credit make loan documents with fair terms particularly beneficial to consumers. Part IV discusses current …

Mortgage Law In China: Comparing Theory And Practice, Gregory M. Stein

Missouri Law Review

This Article examines Chinese mortgage law as it actually operates in the field, focusing on both legal and business issues. During the summer of 2005, I interviewed dozens of Chinese and Western lawyers, bankers, real estate developers, government officials, judges, economists, real estate consultants, law professors, business professors, real estate agents, law students, and recent homebuyers. Their comments offer reliable insights into how China's real estate markets truly function. The discussion that follows draws on these conversations to examine China's budding mortgage law practices, including how they developed, how they comport with or differ from written laws, and what questions …

Why Mortgagors Can't Get No Satisfaction, R. Wilson Freyermuth

Faculty Publications

This article addresses current law governing mortgage satisfaction, the need for effective reform, and the extent to which URMSA provides (or fails to provide) that reform.

Adopting Restatement Mortgage Subrogation Principles: Saving Billions Of Dollars For Refinancing Homeowners, Dale A. Whitman, Grant S. Nelson

Faculty Publications

In eras of declining interest rates, millions of residential mortgage loans may be refinanced. When this occurs, it is customary for the refinancing lender to require a title examination and a new mortgagee's title insurance policy. This requirement is expensive, usually costing several hundred dollars or more, and the cost is invariably paid by the borrower. This Article proposes that in the vast majority of refinancings this expense can be substantially reduced or even eliminated. This result can be achieved through proper understanding, adoption, and use of the doctrine of equitable mortgage subrogation articulated in the Restatement (Third) of Property: …

Chinese Mortgage Law: An American Perspective, Dale A. Whitman

Faculty Publications

My objective in this paper is to compare and to evaluate some of the features of the American and Chinese systems. I do so without any preconception that the American system provides better answers, but with the recognition that it is far more mature and provides more answers. Hence it provides a reference point from which the Chinese system can be considered. Perhaps each system has something to teach the other.

Credit Opportunities, Race, And Presumptions: Does The Mcdonnell Douglas Framework Apply In Fair Lending Cases, Richard A. Hill

Missouri Law Review

Congress has recognized that "[i]n a credit oriented society such as ours, impediments to sources of credit based on extraneous factors such as race, color, religion, age, sex, marital status, and the like, have a deleterious effect on both the individual victims of discrimination, and on the economy as a whole."2 Minority borrowers feel the impact of credit discrimination. "They make me feel like I was wasting my time. Like I wasn't worthy of being a home owner."3 Lenders often do not realize what they have done. "The discrimination in mortgage lending with which I've become familiar is not necessarily …

Mortgage Drafting: Lessons From The Restatement Of Mortgages, Dale A. Whitman

Faculty Publications

The American Law Institute's adoption of the Restatement (Third) of Property: Mortgages may have significant impact on the negotiation and drafting of mortgages. Rather than merely reciting the prevailing case law, the Restatement proposes approaches the American Law Institute believes are desirable as a matter of sound policy. This Article highlights key areas in which the new Restatement may affect mortgage drafting and suggests useful techniques for mortgage drafters.

Constitutionality Of Power Of Sale Foreclosures By Federal Government Entities, The, Daniel E. Blegen

Missouri Law Review

When loaning money, lenders often require that obligations be secured by a mortgage on real estate owned by the borrowers. In Missouri, the prevailing form of mortgage is the deed of trust with a power of sale provision. Upon default the trustee is allowed to sell the property without a judicial hearing and after giving only limited notice.' The constitutionality of nonjudicial power of sale foreclosures is well settled as applied to private lenders because of the lack of state or federal notice requirements for the particular county, and the mortgagor's only recourse is to pay the entire amount due …

Of Hotel Revenues, Rents, And Formalism In The Bankruptcy Courts: Implications For Reforming Commercial Real Estate Finance, R. Wilson Freyermuth

Faculty Publications

This article is intended to continue the dialogue begun by the proposed Restatement and has two distinct goals in this effort. Parts I through III argue that the position of the Restatement drafters is both legally and functionally sound and that bankruptcy courts should embrace and apply the proposed Restatement in administering distressed real estate developments. Part I reviews the reasoning articulated in the hotel bankruptcy cases, demonstrating how courts have applied the provisions of the Bankruptcy Code and state law in a formalistic manner to extinguish the hotel mortgagee's lien upon postpetition room revenues. Part II rejects the analysis …

Congressional Preemption Of Mortgage Due-On-Sale Law: An Analysis Of The Garn-St. Germain Act, Dale A. Whitman, Grant S. Nelson

Faculty Publications

We first describe the several major types of mortgagor transfer restrictions, and the judicial and legislative responses to these restrictions before the Act. Second, we analyze the effect and coverage of the important provisions of the Act and its attendant regulation. The complex exceptions to the application of the Act known as “window periods” are then considered. These window periods were created by Congress in an attempt to soften the impact of the Act on states that previously restricted due-on-sale enforcement, and are based on preexisting state law. We examine the difficult standards for identifying such window periods and suggest …