Banking and Finance Law Commons^™

Who Controls The Block? How States Can Regulate Tokenized Residential Real Estate, David J. Reiss, Joseph Bizub, Justin Peralta

Cornell Law Faculty Working Papers

In July 2025, the City of Detroit filed a major nuisance abatement action against RealT, a fintech that had sold blockchain-based fractional interests in more than four hundred Detroit rental properties to some 22,000 investors around the world. Within a year, a court had ordered the company’s rents into escrow, the company had conceded to its investors that its “model no longer works,” and it had announced the liquidation of its portfolio -- leaving tenants without basic services and token holders facing steep losses.

This article uses the rise and collapse of RealT, together with case studies of the other …

Fhfa Comment Letter Regarding Fhlbs Mission, David J. Reiss

Cornell Law Faculty Working Papers

The Federal Housing Finance Agency (the “FHFA”) has requested Input regarding the regulatory statement of the Federal Home Loan Bank System’s (the “System”) mission to better reflect its appropriate role in the housing finance system. I commend the FHFA for being realistic about the System in its Request for Input; it acknowledges that there is a mismatch between its mission and its current operations.

The System’s operations do not do nearly enough to support the System’s stated mission of supporting the financing of housing. The System should recommit to that goal in measurable ways or its name and/or mission should …

Blockchain Coming To A Block Near You: How Fintech Is Changing Real Estate Investing, Joseph Bizub, Justin Peralta, David Reiss

Cornell Law Faculty Working Papers

Until recently, real estate with a small footprint – one-to-four-family homes as well as small retail, office, and industrial buildings – were generally within the purview of small investors who invested locally. Today, because of technological advances, these owner-occupants and investors face competition from an emerging class of decentralized finance (DeFi) investors. Fintech companies are presenting DeFi investors with new approaches to the challenges that real estate investing traditionally poses: illiquidity, high capital requirements, lack of diversification, and opaque markets. This article focuses on how fintech companies are meeting those challenges and suggests that while much of their vaunted innovation …

The Dao Of Real Estate, Joseph Bizub, David Reiss

Cornell Law Faculty Working Papers

Real Estate Investment Trusts (REITs) have long proven their worth as liquid securities that give investors access to many real estate asset classes. Decentralized Autonomous Organizations (“DAOs”) are one of several blockchain real estate innovations seeking to provide a new path to those searching to invest in real estate. While the success of the DAO model of real estate investment is far from assured, these new investment options could offer real competition to REITs one day.

The Capital Commons: A Plan For Building Back Better And Beyond, Robert C. Hockett

Cornell Law Faculty Working Papers

To build our Republic back better we must build our banks better. The overwhelmingly greater part of our investment capital is now publicly generated yet privately managed. But pervasive and still underappreciated recursive collective action predicaments endemic to all exchange economies, combined with the decoupling of profits from production made possible by stratified capital ‘markets’ in such economies, render this unsustainable.

The only way to get public capital allocation right, and thus to get credit modulation and long-term productive investment right, is to manage public capital publicly and private capital privately. This paper shows how to do that through the …

The Capital Commons: Digital Money And Citizens' Finance In A Productive Commercial Republic, Robert C. Hockett

Cornell Law Faculty Working Papers

All societies must address two questions where the organization of productive activity is concerned. The first is whether production will be mainly publicly managed, privately managed, or 'mixed.' The second is whether the financing of production will be mainly publicly managed, privately managed, or mixed.

In the American commercial republic, we seem more or less to have answered the 'who does production' question to our own satisfaction. From the founding era to the present, we have elected to leave production primarily, though not of course solely, 'in private hands.' Where the financing of production is concerned, on the other hand, …

The Federal Home Loan Bank System: A Bibliography, David J. Reiss

Cornell Law Faculty Working Papers

This is an unannotated bibliography of writings through 2016 primarily about the Federal Home Loan Bank System (FHLBS), but it also includes materials regarding the savings and loan (S&L) industry. While it is comprehensive, it is not exhaustive, with a focus on work published by government agencies, economists, legal and policy scholars, private sector analysts and think tanks. The bibliography also includes other materials about the housing finance market in the 19th and early 20th Century. These materials provide some context for the operations of the FHLBS and the S&L industry.

Cfpb Comment Letter Re Atr/Qm Assessment, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

Cfpb Comment Letter Re Respa Assessment, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

America's Consumer Financial Sheriff And The Horse It Rides Are Under Fire, David Reiss

Cornell Law Faculty Working Papers

Dodd-Frank implemented regulations that work very well in the consumer credit markets. It created a regulator, the CFPB, that has been very effective at keeping the bad guys out of those markets. The Financial CHOICE Act will seriously weaken the CFPB. It will gut the Consumer Financial Protection Bureau and return us to the Wild West days of the early 2000s where predatory lenders could prey on the elderly and the uneducated, knowing that there was no sheriff in town to stop ‘em.

The Cfpb Is A Champion For Americans Across The Country, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

Is There A Bipartisan Fix For Fannie And Freddie?, David J. Reiss

Cornell Law Faculty Working Papers

It is welcome news to hear that Senators Corker (R-TN) and Warner (D-VA) are looking to craft a bipartisan solution to the problem of Fannie Mae and Freddie Mac. The two massive mortgage companies have been in conservatorship since 2008 when they were on the verge of failing. At that time, nobody, just nobody, believed that they would still be in conservatorship ten years later.

Housing finance reform requires statesmanship because there are no short-term gains that will accrue to the politicians that lead it. And the long -term gains will be very diffuse – nobody will praise them for …

Dodd-Frank Repeal Unappealing For Homeowners, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

What Is At Stake With The Fha?, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

Mnuchin, When No One Is Watching, David J. Reiss

Cornell Law Faculty Working Papers

UCLA’s legendary basketball coach John Wooden said that the “true test of a man’s character is what he does when no one is watching.” Steven Mnuchin, another leading citizen of Los Angeles, is now in the spotlight as President-Elect Trump’s nominee to lead the Department of the Treasury. Running the Treasury requires financial know-how, which this former Goldman Sachs banker has in spades. But it also requires character, as a large part of the Treasury Secretary’s job is to embody the good faith that the American people want the rest of the world to have in us.

It's Time To Take Housing Finance Reform Through The 21st Century, David J. Reiss

Cornell Law Faculty Working Papers

Fannie Mae and Freddie Mac, the two mortgage giants under the control of the federal government, have more than 45 percent of the share of the $10 trillion of mortgage debt outstanding. Ginnie Mae, a government agency that securitizes Federal Housing Administration (FHA) and Veterans Affairs (VA) mortgages, has another 16 percent.

These three entities together have a 98 percent share of the market for new residential mortgage-backed securities. This government domination of the mortgage market is not tenable and is, in fact, dangerous to the long-term health of the housing market, not to mention the federal budget.

No one …

Expanding The Credit Box, David J. Reiss

Cornell Law Faculty Working Papers

The mortgage market of the early 2000s provided mortgage credit to too many people who could not make their monthly payments on the terms offered. The pendulum has now swung. Today’s market offers very few unsustainable mortgages, but it fails to provide credit to some who could afford them. That means that the credit box is not at its socially optimal size. The Consumer Financial Protection Bureau should make it a priority to review the regulatory regime for non-Qualified Mortgages in order to ensure that the functional credit box is expanded to more closely approximate the universe of borrowers who …

Fhfa Proposed Collection For National Survey Of Mortgage Originations, David J. Reiss

Cornell Law Faculty Working Papers

The Federal Housing Finance Agency has issued a request for comments on the National Survey of Mortgage Originations (NSMO). I write to support this proposed collection, but also to raise some concerns about its efficacy.

The NSMO is very important to the health of the mortgage market. We need only look at the Subprime Boom of the late 1990s and early 2000s to see why this is true: subprime mortgages went from “making up a tiny portion of new mortgage originations in the early 1990s” to “40 percent of newly originated securitized mortgages in 2006.” During the Boom, subprime lenders …

Fhfa Single Security/Common Securitization Platform Comment, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

Ffiec Consumer Compliance Comment Letter, David J. Reiss

Cornell Law Faculty Working Papers

The Federal Financial Institutions Examination Council (FFIEC) issued a notice and request for comment regarding the Uniform Interagency Consumer Compliance Rating System (CC Rating System). The FFIEC is seeking to revise the CC Rating System “to reflect the regulatory, examination (supervisory), technological, and market changes that have occurred in the years since the current rating system was established.” 81 F.R. 26553. It is a positive development that the federal government is seeking to implement a consistent approach to consumer protection across a broad swath of the financial services industry. Nonetheless, the proposed CC Ratings System can be refined to further …

Cfpb Collection Activities Comment Letter, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

Fhfa Duty To Serve Comment Letter, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

The Federal Housing Administration (Fha) And Private Mortgage Insurance (Pmi): A Bibliography, David J. Reiss

Cornell Law Faculty Working Papers

This is an unannotated bibliography of writings through 2015 primarily about the Federal Housing Administration (FHA), but it also includes materials regarding the private mortgage insurance (PMI) industry. While it is comprehensive, it is not exhaustive, with a focus on work published by government agencies, economists, legal and policy scholars, private sector analysts and think tanks. The bibliography also includes other materials about the housing finance market in the early and mid-20th Century. These broader materials provide some context for the operations of the FHA and PMI.

This bibliography will be posted on Wikipedia so that others can make additions …

Comment On Home Mortgage Disclosure Act Proposed Rulemaking, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

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.

The Fhfa's Proposed Single Security Structure, David J. Reiss

Cornell Law Faculty Working Papers

The Federal Housing Finance Agency (FHFA) has posted a Request for Input on “the proposed structure for a Single Security that would be issued and guaranteed by Fannie Mae or Freddie Mac.” The FHFA states it is most concerned with achieving “maximum secondary market liquidity” (Request for Input, at 8)

I am skeptical about the reasons for this move to a Single Security and whether it will achieve maximum liquidity. Moreover, it is unclear to me that this move reflects an urgent need for the FHFA, the two companies, originating lenders or borrowers. While I have no doubt that it …

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 …

Armed, Unarmed Or Harmed By Knowledge? A Comment On The Fha's Housing Counseling Pilot Program, David J. Reiss

Cornell Law Faculty Working Papers

The FHA has requested input on its Homeowners Armed with Knowledge (HAWK) for New Homebuyers pilot program. This comment letter argues that housing counseling is not a proven solution to the problem it is meant to solve, excessive defaults by FHA borrowers. HAWK is a traditional housing counseling program but the scholarly literature casts into doubt the efficacy of such programs. It would be better to take time to research which counseling strategies, if any, are proven to be effective. This is true for the FHA but also for other government agencies, such as the Consumer Financial Protection Bureau, that …

Paying For Risk: Bankers, Compensation, And Competition, Simone M. Sepe, Charles K. Whitehead

Cornell Law Faculty Working Papers

Efforts to control bank risk address the wrong problem in the wrong way. They presume that the financial crisis was caused by CEOs who failed to super­vise risk-taking employees. The responses focus on exe­cutive pay, believing that exe­cu­tives will bring non-execu­tives into line—using incen­­­­tives to manage risk-taking—once their own pay is regu­lated. What they over­look is the effect on non-executive pay of the com­pe­­ti­­tion for talent. Even if exe­­cu­tive pay is regu­lated, and exe­cu­tives act in the bank’s best interests, they will still be trapped into providing incentives that encourage risk-taking by non-executives due to the negative exter­nality that arises …

The Emperor’S New Loans: A Cautionary Tale From The Subprime Era, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.