April 24, 2017
- The Consumer Financial Protection Bureau on Thursday sued mortgage servicer Ocwen Financial Corp. in Florida federal court alleging that the firm’s servicing database is riddled with inaccuracies and incomplete information that resulted in wrongful foreclosure proceedings against around 1,000 families
- Commerzbank AG urged a New York judge on Tuesday not to rethink his allowing its claims over the Bank of New York Mellon’s oversight of residential mortgage-backed securities to proceed, saying BNY Mellon cannot point to anything the judge overlooked.
- Wells Fargo announced Friday that it is expanding both the size of the fake account class action settlement and the time period the settlement covers by an additional seven years. According to an announcement from Wells Fargo, the settlement is being expanded by $32 million to $142 million, and now covers anyone who had a fake account opened in their name all the way back to 2002.
April 21, 2017
The Hill published my latest column, The CFPB Is a Champion for Americans Across The Country. It opens,
Republicans like Sen. Ted Cruz (R-Texas) have been arguing that consumers should be freed from the Consumer Financial Protection Bureau’s “regulatory blockades and financial activism.” House Financial Services Committee Chairman Jeb Hensarling (R-Texas) accuses the CFPB of engaging in “financial shakedowns” of lenders. These accusations are weighty.
But let’s take a look at the types of behaviors consumers are facing from those put-upon lenders. A recent decision in federal bankruptcy court, Sundquist v. Bank of America, shows how consumers can be treated by them. You can tell from the first two sentences of the judge’s opinion that it goes poorly for the consumers: “Franz Kafka lives. This automatic stay violation case reveals that he works at Bank of America.”
Click here to read the rest of the column.
April 20, 2017
CoinDesk.com quoted me in Land Registry: A Big Blockchain Use Case Explored. It opens,
With distributed ledger technology being promoted as a benefit to everything from farming to Fair Trade coffee, use case investigation has emerged as a full-time fascination for many.
In this light, one popular blockchain use case that has remained generally outside scrutiny has been land title projects started in countries including in Georgia, Sweden and the Ukraine.
One could argue land registries seemed to become newsworthy only after work on the use case had begun. However, those working on projects disagree, asserting that land registries could prove one of the first viable beachheads for blockchain.
Elliot Hedman, chief operating officer of Bitland Global, the technology partner for a real estate title registration program in Ghana, for example, said that issues with land rights make it a logical fit.
Hedman told CoinDesk: “As for the benefit of a blockchain-based land registry, look to Haiti. There are still people fighting over whose land is whose. When disaster struck, all of their records were on paper, that being if they were written down at all.”
Hedman argued that, with a blockchain-based registry employing a network of distributed databases as a way to facilitate data exchange, the “monumental headache” associated with a recovery effort would cease.
Modern real estate
To understand the potential of a blockchain land registry system, analysts argue one must first understand how property changes hands.
When a purchaser seeks to buy property today, he or she must find and secure the title and have the lawful owner sign it over.
This seems simple on the surface, but the devil is in the details. For a large number of residential mortgage holders, flawed paperwork, forged signatures and defects in foreclosure and mortgage documents have marred proper documentation of property ownership.
The problem is so acute that Bank of America attempted foreclosure on properties for which it did not have mortgages in the wake of the financial crisis.
Readers may also recall the proliferation of NINJA (No Income, No Job or Assets) subprime loans during the Great Recession and how this practice created a flood of distressed assets that banks were simply unable to handle.
The resulting situation means that the property no longer has a ‘good title’ attached to it and is no longer legally sellable, leaving the prospective buyer in many cases with no remedies.
Land registry blockchains seek to fix these problems.
By using hashes to identify every real estate transaction (thus making it publicly available and searchable), proponents argue issues such as who is the legal owner of a property can be remedied.
“Land registry records are pretty reliable methods for maintaining land records, but they are expensive and inefficient,” David Reiss, professor of law and academic program director at the Center for Urban Business Entrepreneurship, told CoinDesk.
He explained: “There is good reason to think that blockchain technology could serve as the basis for a more reliable, cheaper and more efficient land registry.”
- The total time for the process of closings in the U.S. are at the lowest level in over 700 days. In February and March of this year, the time span for closings landed at 46 and 43 days respectively. Last year the Consumer Financial Protection Bureau created the “TILA-RESPA Integrated Disclosure rule” which caused the industry to create a narrowed focus to decrease the time length of U.S. closings.
- The Office of Comptroller of the Currency (OCC) failed to affirmatively do it’s job when working with Wells Fargo. A report shows that shows the agency failed to take action when Wells Fargo began to fire bank tellers for creating “accounts without customer authorization.” Their oversight failure led to the false creation of over two million accounts.
- Residential House Prices, Commercial Real Estate and Bank Failures, Fissel, Hanweck, and Sanders.
- Governance Structures and Trust: A Study of Real Estate Networks, Armando, Azevedo, Boaventura, Carnauba, and Todeva
- The Federal Housing Administration and African-American Homeownership, Reiss
- Do the FASB’s Standards Add Shareholder Value?, Khan, Rajgopal, and Venkatachalam
- Equity Risk Premiums (ERP): Determinants, Estimation, and Implications- The 2017 Edition, Damodaran
April 18, 2017
The United States Federal Housing Administration (“FHA”) has been a versatile tool of government since it was created during the Great Depression. It achieved success with some of its goals and had a terrible record with others. Its impact on African-American households falls, in many ways, into the latter category. The FHA began redlining African-American communities at its very beginning. Its later days have been marred by high default and foreclosure rates in those same communities.
At the same time, the FHA’s overall impact on the housing market has been immense. Over its lifetime, it has insured more than 40 million mortgages, helping to make home ownership available to a broad swath of American households. And indeed, the FHA mortgage was central to America’s transformation from a nation of renters to homeowners. The early FHA really created the modern American housing finance system, as well as the look and feel of postwar suburban communities.
Recently, the FHA has come under attack for the poor execution of some of its policies to expand homeownership, particularly minority homeownership. Leading commentators have called for the federal government to stop employing the FHA to do anything other than provide liquidity to the low end of the mortgage market. These critics’ arguments rely on a couple of examples of programs that were clearly failures, but they fail to address the FHA’s long history of undertaking comparable initiatives. This Article takes the long view and demonstrates that the FHA has a history of successfully undertaking new homeownership programs. At the same time, the Article identifies flaws in the FHA model that should be addressed in order to prevent them from occurring if the FHA were to undertake similar initiatives to expand homeownership opportunities in the future, particularly for African-American households.