Banking and Finance Law Commons^™

Lending Discrimination, The Foreclosure Crisis And The Perpetuation Of Racial And Ethnic Disparities In Homeownership In The U.S., Aleatra P. Williams

William & Mary Business Law Review

For decades the agencies charged with minding the ‘fair credit and lending’ shop turned a blind eye to those (lenders) who pilfered minority homeownership (and consequently minority wealth) by extending mortgage lending products that were, in many cases, unequal to similarly situated non-minority counterparts. Since the 1950s, when the federal government endorsed homeownership policies for minorities, and the 1960s, when antidiscriminatory D9lending laws were enacted, access to fair mortgage credit has been unattainable. Unbridled lending discrimination culminated in massive foreclosures for a disproportionate number of minority homeowners during the Housing and Foreclosure Crisis. Lenders disparately foreclosed upon upper class, middle …

Super-Liens To The Rescue? A Case Against Special Districts In Real Estate Finance, Christopher K. Odinet

Faculty Scholarship

In a time of limited resources and sluggish economic growth, competition between cities has become palpable, and the race for new investment often dictates the public agenda. To that end, the explosive growth of public-private partnerships between local governments and private investors has resulted in the creation of a myriad of special taxing districts, the purposes of which are limited only by the imagination. Of particular concern has been the growth of certain real estate development-related districts. Although first conceived to fund critical improvements where conventional credit was not available, in more recently years these special districts have been used …

Mission Impracticable: The Impossibility Of Commercial Impracticability, Jennifer Camero

The University of New Hampshire Law Review

[Excerpt] “Residents of Chicago’s Streeterville neighborhood certainly cannot forget the recent financial crisis thanks to a gaping hole in their midst. That hole is to be the home of the Spire, the tallest building in the Northern Hemisphere, at 2,000 feet high with 1,194 residences ranging in price from $750,000 for a studio to $40 million for the penthouse. The developer, Shelbourne Development Group, Inc., began construction in 2007 using its own funds. It also obtained “starter” funds from Bank of America via a loan agreement that required Shelbourne to demonstrate proof of a construction loan by November 1, 2008. …

Bank Regulation And Securitization: How The Law Improved Transmission Lines Between Real Estate And Banking Crises, Erik F. Gerding

Publications

This essay examines how securitization served as a new coupling rod joining cycles in real estate and banking markets and created a new pathway for financial contagion in the “subprime” financial crisis. Legal changes promoted the growth of securitization and improved this crisis transmission line. The essay examines the history of legislative and regulatory changes that facilitated bank participation in the markets for mortgage-backed securities. The essay then explains how securitization failed to mitigate the credit, liquidity, and interest rate risk associated with real estate when losses in residential markets became correlated nationwide. It then discusses how regulation contributed to …

Bank Regulation And Securitization: How The Law Improved Transmission Lines Between Real Estate And Banking Crises, Erik F. Gerding

Georgia Law Review

Financial crises take many forms. Real estate crises can devastate economies.' So too can bank crises. Stock market crashes can precipitate crises of their own. The "subprime crisis" represents the confluence and worst of all three; like three cyclones merging together in warm offshore waters, these three kinds of crises generated even more destructive force when conjoined. The panic that took shape in U.S. real estate and capital markets in 2007 represents another example in a long historical line of intertwined banking and real estate crises. Securitization served as a new coupling rod joining cycles in real estate and banking …

Symposium: The Role Of Federal Law In Private Wealth Transfer, Jeffrey Schoenblum

Vanderbilt Law School Faculty Publications

Increasingly, federal law impacts court decisions involving private wealth transfer. Increasingly, federal law is the central consideration in premortem and postmortem planning for private wealth transfer. Despite this, until recently, little scholarly attention has been paid to this phenomenon; the assumption regarding the centrality of state law, quoted above, having gone largely unquestioned. But now that the "sleeping giant" has awakened, the role that federal law plays in private wealth transfer requires serious and comprehensive academic consideration.

Response: Who Should Be Providing Mortgage Credit To American Households?, David Reiss

Cornell Law Faculty Publications

Who should be providing mortgage credit to American households? Given that the residential mortgage market is a ten-trillion-dollar one, the answer we come up with had better be right, or we may suffer another brutal financial crisis sooner than we would like. Indeed, the stakes are as high as they were in the Great Depression when the foundation of our current system was first laid down. Unfortunately, the housing finance experts of the 1930s seemed to have a greater clarity of purpose when designing their housing finance system. Part of the problem today is that debates over the housing finance …

Comment On The Fhfa's Small Multifamily Subgoal, David J. Reiss, Jeffrey Lederman

Cornell Law Faculty Working Papers

As the FHFA sets the housing goals for 2015-2017, it should focus on maximizing the creation and preservation of affordable housing. Less efficient proposed subgoals should be rejected unless the FHFA has explicitly identified a compelling rationale to adopt them. The FHFA has not identified one in the case of the proposed small multifamily subgoal. Thus, it should be withdrawn.

Who Should Be Providing Mortgage Credit To American Households?, David J. Reiss

Faculty Scholarship

No abstract provided.

Nevada's Foreclosure Epidemic: Homeowner Associations' Super-Priority Liens Not So "Super" For Some, Kylee Gloeckner

Nevada Law Journal

No abstract provided.

The Future Of The Private Label Securities Market, David J. Reiss

Cornell Law Faculty Working Papers

The PLS market, like all markets, cycles from greed to fear, from boom to bust. The mortgage market is still in the fear part of the cycle and recent government interventions in it have, undoubtedly, added to that fear. In recent days, there has been a lot of industry pushback against the government’s approach, including threats to pull out of various sectors. But the government should not chart its course based on today’s news reports. Rather, it should identify fundamentals and stick to them. In particular, its regulatory approach should reflect an attempt to align incentives of market actors with …

The Perils Of Primacy: Successor Liability For Lenders Turned Declarants In Louisiana Common Interest Communities, Christopher K. Odinet

Faculty Scholarship

In surveying the landscape of contemporary American real estate, it is increasingly difficult — if not impossible — to find a development that is not part of a common-interest community. Whether one is strolling through the avenues of a mixed-use commercial development or driving down the manicured tree-lined streets in a residential neighborhood, a complex and detailed legal regime underpins these developments in order to ensure that the order, quality, and aesthetic of the project is ensured and maintained from its earliest days and long into its future.

Since its inception in the early 1900s, the complexity of common interest …

Treading Water: Can Municipal Efforts To Condemn Underwater Mortgages Prevail?, Michael S. Moskowitz

Pepperdine Law Review

No abstract provided.

The Future Of Fannie And Freddie, Mark Calabria, David Reiss, Lawrence White, Mark Willis

Cornell Law Faculty Publications

This is a transcript of a panel discussion titled, “The Future of Fannie and Freddie.” The panelists were Dr. Mark Calabria from the Cato Institute; Professor David Reiss from Brooklyn Law School; Professor Lawrence White from NYU Stern School of Business; and Dr. Mark Willis from NYU’s Furman Center for Real Estate and Urban Policy. The panel was moderated by Professor Michael Levine from NYU School of Law. Panelists looked at economic policy and future prospects for Fannie and Freddie. The remarks have not been edited by the panelists.

Evaluating The Impact Of The Home Affordable Modification Program In Response To The Foreclosure Crisis: Why Real Estate Securitization Demands A New Approach, John Kinney

University of the District of Columbia Law Review

This case presents an unfortunate, but all too common set of circumstances in the world today. Plaintiff is a homeowner in financial distress who seeks a loan modification from an unresponsive bank relying on an ineffectual federal program. This statement, by Magistrate Lois Bloom in Rivera v. Bank of America, best captures the utter frustration felt by financially distressed homeowners and sympathetic judges regarding the government's failed efforts to stem the foreclosure crisis. Heard countless times in thousands of courtrooms across the country in the aftermath of the 2008 global financial meltdown, Magistrate Bloom expressed what seemed deliberate efforts by …

Banking And The Social Contract, Mehrsa Baradaran

Notre Dame Law Review

This Article asserts that there are three major tenets of the social contract: (1) safety and soundness, (2) consumer protection, and (3) access to credit. Regulators can and should require banks to meet standards in these areas to benefit society even if these measures reasonably reduce bank profits. Implicit in the social contract is the idea that each party must give up something in the exchange. This Article provides policymakers not only the appropriate narrative and justifications needed to frame their regulatory philosophy, but it also provides important textual support from the most prominent acts of banking legislation to give …

"We Buy Houses": Market Heroes Or Criminals?, Cori Harvey

Journal Publications

The residential sale/leaseback/buyback transaction is a socially beneficial foreclosure rescue transaction that is being regulated increasingly by the criminal courts to the detriment of the homeowners, investors, and society at large. Because the transaction is being regulated more aggressively with the criminal law, peculiar outcomes arise, which include investors being sentenced, in some cases, to draconian sentences --a trend that will eviscerate the transactions rather than improving them.

In calling for a retreat from that position, this Article makes both descriptive and prescriptive claims. The first descriptive claim is that the transaction is a beneficial one and that it has …

"We Buy Houses": A Foreclosure Rescue As The Solution To The Trapped Homeowner Equity Problem, Cori Harvey

Journal Publications

Foreclosure rescue transactions are viewed widely as scams designed, among other things, to dupe poor, minority, and elderly homeowners out of the equity in their homes. However, foreclosure rescue transactions come in many forms and, as an alternative to foreclosure, often maintain valuable options for homeowners that the homeowners otherwise would lose in the traditional foreclosure process. For this reason, many of these transactions, though imperfect, should be preserved and supported.

This Article introduces one such foreclosure rescue transaction, the residential sale/leaseback/buyback ("RSLB") transaction, into the legal literature from the perspective of the rescue investors. A basic RSLB transaction allows …

"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 …

Mortgage Modification And Strategic Behavior: Evidence From A Legal Settlement With Countrywide, Christopher Mayer, Edward R. Morrison, Tomasz Piskorski, Arpit Gupta

Faculty Scholarship

We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by settlement of U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers. Using a difference-in-difference framework, we find that Countrywide's monthly delinquency rate increased more than 0.54 percentage points – ten percent relative increase – immediately after the settlement's announcement. The estimated increase in default rates is largest among borrowers least likely to default otherwise. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs.

Dirty Remics, Revisited, Bradley T. Borden, David J. Reiss

Cornell Law Faculty Publications

No abstract provided.

The Undersigned Attorney Hereby Certifies -- The Washington Supreme Court Rule On Standards And Its Implications, Justice Sheryl Gordon Mccloud, Justice Susan Owens, Marc Boman, Joanne Moore

Seattle Journal for Social Justice

No abstract provided.

G Forces: Gideon V. Wainwright And Matthew Adler's Move Beyond Cost-Benefit Analysis, Janet Moore

Seattle Journal for Social Justice

No abstract provided.

Dark Medicine: How The National Research Act Has Failed To Address Racist Practices In Biomedical Experiments Targeting The African-American Community, Anietie Maureen-Ann Akpan

Seattle Journal for Social Justice

No abstract provided.

Do We Have It Right This Time? An Analysis Of The Accomplishments And Shortcomings Of Washington's Indian Child Welfare Act, Karen Gray Young

Seattle Journal for Social Justice

No abstract provided.

Securing Food Justice, Sovereignty & Sustainability In The Face Of The Food Safety Modernization Act (Fsma), Eve Kerber

Seattle Journal for Social Justice

No abstract provided.

Driving While License Suspended - Third Degree, A Framework For Requesting Alternative Sentences, Sahar Fathi

Seattle Journal for Social Justice

No abstract provided.

About The Authors

Seattle Journal for Social Justice

No abstract provided.

Table Of Contents

Seattle Journal for Social Justice

No abstract provided.

Introduction, Jacqueline Mcmurtrie

Seattle Journal for Social Justice

No abstract provided.