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Full-Text Articles in Legal Remedies
Three Proposals For Regulating The Distribution Of Home Equity, Ian Ayres, Joshua Mitts
Three Proposals For Regulating The Distribution Of Home Equity, Ian Ayres, Joshua Mitts
Faculty Scholarship
The Consumer Financial Protection Bureau’s recently-released “qualified mortgage” rules effectively discourage predatory lending but miss an equally important source of systemic risk: low-equity clustering. Specific “volatility-inducing” mortgage terms, when present in a substantial cluster of mortgage contracts, exacerbate macroeconomic risk by increasing the chance that the housing and lending markets will have to absorb a wave of simultaneous defaults after a downturn in housing prices. This Article shows that these terms became prevalent in a substantial proportion of residential mortgages in the years leading up to the home mortgage crisis. In contrast, during the earlier “amortization era” (when mortgagors were …
Compensating Market Value Losses: Rethinking The Theory Of Damages In A Market Economy, Steven L. Schwarcz
Compensating Market Value Losses: Rethinking The Theory Of Damages In A Market Economy, Steven L. Schwarcz
Faculty Scholarship
The BP Deepwater Horizon spill and the Toyota car recalls have highlighted an important legal anomaly that has been overlooked by scholars — judicial inconsistency and confusion in ruling whether to compensate for the loss in market value of wrongfully affected property. This article seeks to understand the anomaly and, in the process, to build a stronger foundation for enabling courts to decide when — and in what amounts — to award damages for market value losses. To that end, the Article analyzes the normative rationales for generally awarding damages, adapting those rationales to derive a theory of damages that …