Law Commons^™

Crypto In Real Estate Finance, R. Wilson Freyermuth, Christopher K. Odinet, Andrea Tosato

Faculty Publications

Blockchain and cryptocurrencies have ushered in a digital gold rush. But all that glitters is not gold. The latest fad is the use of non-fungible tokens (NFTs) to purchase and finance real estate. Typically, crypto real estate transactions begin with the transfer of title for a residential property into a dedicated business entity, such as a limited liability company. Thereafter, an NFT is ‘minted’ and used to represent the ownership interest in that entity. The real property is then marketed online specifying that, to acquire it, one simply purchases the relevant NFT via a blockchain transfer. Crucially, buyers are expected …

Non-Debt And Non-Bank Financing For Home Purchase: Promises And Risks, Shelby D. Green

Elisabeth Haub School of Law Faculty Publications

This Article explores the phenomenon of the NDNBs in home purchase and finance that has gained a growing presence in the mortgage marketplace since the 2008 crisis. Part II offers a deeper discussion of the risk-prone practices leading to the 2008 housing crisis and the regulatory and industry responses for recovery. Parts III and IV describe the emerging new models of home purchase. Part IV explores some of the apparent and hidden risks in these transactions. Part VI concludes with suggestions for assessing and managing risks and for reforms.

A-Void-Able Consequences: Void Sales & Subsequent Purchasers Under Arkansas’S Statutory Foreclosure Act, Hannah Hungate

Arkansas Law Notes

This Comment explores Arkansas’s Statutory Foreclosure Act and addresses the question of whether there can be a “subsequent purchaser for value” when a foreclosure sale is void from the outset. After a review of the Act itself, distinction between void and voidable foreclosures of property, findings of other state courts, and proper application of the Act, the author urges the Arkansas Supreme Court to make a formal declaration finding that purchasers of property foreclosed upon in a void sale are not “subsequent purchasers for value” under the meaning of the statute.

Cranesbill Tr. V. Wells Fargo Bank, 136 Nev. Adv. Op. 8 (March 5, 2020), Brittney Lehtinen

Nevada Supreme Court Summaries

The Court determined that homeowners may cure defaults as to superpriority portions of HOA liens much like first deed of trust holders; however, failure to explicitly or implicitly direct allocation of payments by either debtors or creditors requires court intervention to decide what is “just and equitable.”

Berberich V. Bank Of America, 136 Nev. Ad. Op (Mar. 26, 2020), Amelia Mallette

Nevada Supreme Court Summaries

The Supreme Court of Nevada considered whether a quiet title action from a foreclosure sale was barred by NRS 11.080 because Berberich was in possession of the property for five years before commencing the action. The Court held that the limitations period outlined in NRS 11.080 will not run against an owner who is in undisputed possession of the land.

Contract Consentability: Autonomy Threats, Benefits, And Framing, Eric A. Zacks

Law Faculty Research Publications

No abstract provided.

Saticoy Bay Llc V. Nev. Ass’N Servs., 135 Nev. Adv. Op. 23 (Jul. 3, 2019), Katrina Fadda

Nevada Supreme Court Summaries

The Court held that (1) under Nevada's HOA foreclosure redemption statute NRS 116.31166(3) a homeowner may use proceeds from the foreclosure sale to go towards redemption of the property; and (2) that sufficient compliance with the statute is enough to satisfy the statute's requirements.

Daisy Trust V. Wells Fargo Bank, N.A., 135 Nev. Adv. Op.30 (Jul. 25, 2019), Julia Armendariz

Nevada Supreme Court Summaries

The Court determined that (1) NRS § 106.210 and NRS § 111.325 do not require a beneficiary to be identified on the publicly recorded deed of trust to establish ownership interest in the subject loan and (2) a loan service agreement or an original promissory note is not required to by the loan servicer to assert the Federal Foreclosure Bar on another’s behalf so long as properly authenticated business records can establish the ownership interest and (3) The Federal Foreclosure Bar preempts NRS § 116.3116(2) and prevents an HOA foreclosure sale from extinguishing the first deed of trust.

Yesterday I Was Lying: Creeping Preclusion Of Reciprocal Fee Awards In Residential Foreclosure Litigation, Eric A. Zacks, Dustin A. Zacks

Law Faculty Research Publications

No abstract provided.

Modern Waste Law, Bankruptcy, And Residential Mortgage, Jill M. Fraley

Scholarly Articles

Around the time of the subprime mortgage collapse, lenders began in earnest to sue borrowers by adapting the traditional law of waste. Today, these claims continue to rise in frequency and to expand to more jurisdictions. Lender waste claims provide a “work around” for state mortgage laws that prohibit personal deficiency judgments after foreclosure and are potentially non-dischargeable in bankruptcy.

While a recent wave of scholarship has addressed the problems of how the bankruptcy system handles mortgages, scholars have not yet explored the use of waste actions by lenders and how waste judgments intersect with bankruptcy and foreclosure. Using new …

Sfr Inv.'S Pool 1, Llc V. First Horizon Home Loans, 134 Nev. Adv. Op. 4 (Feb. 1, 2018), Brendan Mcleod

Nevada Supreme Court Summaries

The Court determined that, under provisions of NRS 116.31162, when an HOA records a notice of a foreclosure sale, any subsequent buyer who purchases the property is subject to that notice that a foreclosure may be imminent.

Stategraft, Bernadette Atuahene, Timothy Hodge

All Faculty Scholarship

Although sometimes difficult to detect, governmental power abuses can have detrimental impacts. Property tax assessments provide an effective lens to examine this phenomenon because, given the complexity of calculating property tax assessments, it is difficult for citizens to know when local government has exceeded its legitimate taxing authority and crossed into the realm of illegal extraction. Michigan is an ideal case study because it protects property owners by making assessment-related power abuses more visible through a unique state constitutional provision: property tax assessments cannot exceed 50 percent of a property’s market value. Abuses have persisted nevertheless. Between 2011 and 2015, …

No Brakes: Loan Acceleration And Diminishing Foreclosure Defenses, Eric A. Zacks, Dustin A. Zacks

Law Faculty Research Publications

No abstract provided.

The New Model Negotiated Alternative To The Foreclosure Act, R. Wilson Freyermuth, Dale A. Whitman

Faculty Publications

One of the many painful lessons learned from the mortgage crisis that began in 2007 is that foreclosure is often a costly, slow, inefficient, and uncertain process. The additional cost and uncertainty for lenders are magnified when the balance of the mortgage debt exceeds the value of the collateral (that is, when the borrower is “underwater”), and thus full recovery by the lender of its investment is unlikely. Ways to avoid this misery are for the lender (usually represented by the servicer for a secondary market purchaser or a securitized trust) and the borrower to enter into a deed in …

Foreclosure Of A Deed Of Trust In Virginia, Doug Rendleman

Scholarly Articles

This article deals with foreclosure of a deed of trust in Virginia. The Introduction discusses the deed of trust or mortgage as a social and political institution and the foreclosure crisis that seems to be ending. Part I is a brief history of mortgage law. It provides a short history of the modern mortgage system in the United States. Part II follows with a description of the approach that Virginia takes to mortgages. It localizes the mortgage institution to Virginia and introduces Virginia's vocabulary and technical details, the deed of trust, and the parties' rights and obligations. Part III provides …

How To Kill A Zombie: Strategies For Dealing With The Aftermath Of The Foreclosure Crisis, Judith L. Fox

Journal Articles

The foreclosure crisis which began in 2008 is old news; or is it? A lot of attention has been paid to the plight of homeowners struggling to save their homes from foreclosure. Legislative and regulatory changes have made it easier for homeowners to navigate the loss mitigation process. A significant number of people, however, did not try to save their homes. In fact, some actively tried unsuccessfully to give the homes back to their lender. These abandoned homes and abandoned foreclosures have become zombie mortgages. This is the legacy of this crisis.

The existence of these homes is well documented …

"Pennies On The Dollar": Reallocating Risk And Deficiency Judgment Liability, Kristen Barnes

Akron Law Faculty Publications

Many homeowners are unaware that they face the prospect of crushing personal financial liability if they default on their mortgage loans. While owners may appreciate that they can lose their homes to the lender if they fail to make payments in accordance with their loan terms, many do not fully comprehend that the exposure they have under such circumstances does not end with relinquishing the financed property. In what are known as recourse states, if the lender forecloses and the foreclosure sale does not yield an amount sufficient to cover the borrower’s outstanding debt balance, the lender may file for …

A Federalist Blessing In Disguise: From National Inaction To Local Action On Underwater Mortgages, Robert C. Hockett, John Vlahoplus

Cornell Law Faculty Publications

While it is widely recognized that the mortgage debt overhang left by the housing price bubble and bust continues to operate as the principal drag upon U.S. macroeconomic recovery, few seem to appreciate just how locally concentrated the problem is. This paper takes the measure of the national mortgage debt overhang problem as a cluster of local problems warranting local action. It then elaborates on one form of such action that the localized nature of the ongoing mortgage crisis justifies - use of municipal eminent domain authority to purchase underwater loans, then modify them in a manner that benefits debtors, …

Eminent Domain: The Solution To The Foreclosure Crisis Or Overstepping Government Boundaries?, Anne T. T. Jensen

Law Student Publications

This article will provide both an analysis of the legal concept of eminent domain and its likelihood of success in resuscitating real estate markets in towns like San Bernandino. Sections Two and Three will explore the background of the mortgage crisis and provide an in-depth description of the eminent domain proposal by the Mortgage Resolution Partners ("MRP"). Section Four takes a deeper look into the state and federal precedent on a municipality's power to use eminent domain, revealing that the definition of "legitimate public purpose" would likely apply to the seizing of mortgages. Finally, Section Five will focus on the …

“But My Lease Isn’T Up Yet!”: Finding Fault With “No-Fault” Evictions, Eloisa Rodriguez-Dod

Faculty Publications

Historically, tenants could be evicted when their actions put them “at-fault.” Grounds for “at-fault” eviction (i.e., evictions for cause) include a tenant’s failure to pay rent, a tenant’s holding over after termination of the lease, a tenant’s material noncompliance with the lease agreement, and a tenant’s failure to maintain the premises materially affecting health and safety. Recently, some landlords have been evicting tenants for no fault of their own.

This article focuses on three reasons for attempted “no-fault” evictions: foreclosure of the premises, proposed sale of the premises, or intended re-occupancy by the landlord. Part II of this article provides …

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

Scholarly Works

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 foreclosures than others. This Article comprehensively examines the key components …

It Takes A Village: Municipal Condemnation Proceedings And Public/Private Partnerships For Mortgage Loan Modification, Value Preservation, And Local Economic Recovery, Robert C. Hockett

Cornell Law Faculty Publications

Respected real estate analysts forecast that the U.S. is now poised to experience a renewed round of home mortgage foreclosures over the coming six years. Up to eleven million underwater mortgages will be affected. Neither our families, our neighborhoods, nor our state and national economies can bear a resumption of crisis on this order of magnitude.

I argue that ongoing and self-worsening slump in the primary and secondary mortgage markets is rooted in a host of recursive collective action challenges structurally akin to those that brought on the real estate bubble and bust in the first place. Collective action problems …

Why Mortgage "Formalities" Matter, David A. Dana

Faculty Working Papers

This Article argues that adherence to mortgage formalities regarding foreclosure is valuable for expressive reasons and also as a potential deterrent to future undesirable underwriting and securitization practices. The Article reviews how some courts have in effect written procedural requirements for foreclosure out of the law, and asks why these courts have done so and whether lenders' behavior might have been improved during this housing crisis had the state courts uniformly afforded equal respect to the legal rights of homeowners and those of lenders.

More On Mortgage Transfer Mysteries, Roger Bernhardt

Publications

A review of recent federal and state decisions in California involving mortgage transfers.

Ferguson V. Avelo Mortgage, Llc, Roger Bernhardt

Publications

Ability of secondary market participants to foreclose on transferred mortgages.

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 …

Strategic Default: The Popularization Of A Debate Among Contract Scholars, Meredith R. Miller

Scholarly Works

A June 2010 report estimates that roughly 20% of mortgage defaults in the first half of 2009 were “strategic.” “Strategic default” describes the situation where a home borrower has the financial ability to continue to pay her mortgage but chooses not to pay and walks away. The ubiquity of strategic default has lead to innumerable newspaper articles, blog posts, website comments and editorial musings on the morality of homeowners who can afford to pay but choose, instead, to walk away. This Article centers on the current public discourse concerning strategic default, which mirrors a continuing debate among scholars regarding whether …

Mixed Messages On Mortgage Foreclosures, Roger Bernhardt

Publications

A review of recent California decisions involving challenges to mortgage foreclosures.

New Ccp §580e: Deficiency Protection For Certain Short Sales, Roger Bernhardt

Publications

This article discusses the addition of CCP 580e to the current antideficiency statutes, the kinds of borrowers protected and lenders affected. The article coves the new 580e exceptions and the protection it provides in short sales.

An Evolving Foreclosure Landscape: The Ibanez Case And Beyond, Peter R. Pitegoff, Laura S. Underkuffler

Faculty Publications

Mortgage securitization, subprime lending, a persistently weak housing market, and an explosion of residential mortgage defaults – today’s homeowners and banks face a new and challenging landscape. Recently, courts in several states have issued decisions that alter the terrain for mortgage foreclosures. In Massachusetts, New Jersey, and New York, among other states, courts have dismissed foreclosure actions on the basis of what might seem to be highly technical deficiencies in the pleading or proof. The most well-known–and controversial–in this cluster of cases is U.S. Bank National Ass’n v. Ibanez, decided by the Supreme Judicial Court of Massachusetts this year. In …