REFinBlog

Editor: David Reiss
Brooklyn Law School

February 20, 2020

Money, Government and Mortgages

By David Reiss

photo by By Chris McAndrew - https://api.parliament.uk/Live/photo/F7tZ5nm6.jpeg?crop=MCU_3:4&quality=80&download=trueGallery: https://beta.parliament.uk/media/F7tZ5nm6, CC BY 3.0, https://commons.wikimedia.org/w/index.php?curid=67598699

Robert Skidelsky

I just finished reading Money and Government by Robert Skidelsky (2018).  It is a bit tough in parts for non-economists, but it is a great read for those trying to understand the appropriate relationship between economic theory and government policy.  While that may sound dry indeed, it is of key importance to the design of a post-Financial Crisis world regulatory order.

The book delves into the the “Mysteries of Money,” providing a short history of a deceptively simple topic that I continue to find to be difficult to wrap my head around:  what exactly is money and what can you do with it?  The book then goes into some inside baseball analysis of the history of economic thought.  I skimmed this section because it related some pretty technical debates among early economists to set up its more accessible discussion of Keynesian economics and its challenger, Milton Friedman-led Monetarism.  The book then takes a look at how economic theory impacted governments’ responses to the Financial Crisis, for good and for ill.

I think readers of this blog would be most interested by Skidelsky’s insights in the final section, where he tries to sketch “A New Macroeconomics.”  He asks and answers the question, “What Should Governments Do and Why?”  He wants to make banking safe and address inequality.

Readers of this blog will be particularly interested in his analysis and  recommendations for the mortgage market.  He argues that the “main theoretical mistake behind securitization was the assumption that securities are always liquid:  they can always be sold quickly and without (much) loss.”  (328)  The Financial Crisis demonstrated in spades that this was not true.  He argues that “[c]ompelling banks to hold mortgages for a period of years” is the solution to this particular problem.  (363) I do not think that I agree with this solution, but as he argues his point at a high level of generality, it probably is best to say that the devil will be in the details for any reform program in this sphere.

I found his analysis of populism compelling.  He argues that the “political divide between right and left . . . is increasingly overshadowed by one between nationalism and globalism.” (372)  I won’t go into the details here, but he has a very trenchant analysis of how the economist’s theoretical Homo economicus fails to account for important aspects of our humanity as individuals, as members of groups and as citizens of nation-states.  He warns that we do that at our peril:  citizens of democracies will punish their leaders for failing to take into account their complex need to flourish in all of those ways that economists can reduce down to one-dimensional units of measurement, such as “utility.”

Yale University Press says that the book is out of print, but Amazon has paperback copies available if you dig a bit on the book’s web page (and, of course, there are Kindle versions available for those so inclined).  I recommend that you get yourself a copy.

February 20, 2020 | Permalink | No Comments

February 19, 2020

Urban Renewal’s Legacy

By David Reiss

photo by Ziggymarley01

I was quoted in The Ledger (Florida) in Seeking Progress, City Upended Lives in Eliminating Moorehead Community. It opens,

After selecting Moorehead as the site of a new auditorium, Lakeland officials began efforts 50 years ago to inform residents, assess properties, make offers to owners and assist residents in finding new places to live.

Dividing the predominantly black neighborhood roughly in half, the city planned to acquire all of the eastern section north of Lime Street by 1971 and the remainder in 1972.

The campaign, which displaced 122 families, fit into a decades-long national phenomenon in which cities partially or completely removed minority neighborhoods for projects aimed at fostering urban renewal.

The American Housing Act of 1949, part of President Harry Truman’s “Fair Deal,” established the power of governments to seize private property for projects categorized as urban renewal. It also made federal funds available for such projects.

Though intended to replace substandard housing with better options, the Act spurred a flurry of activity that wound up displacing minorities, said David Reiss, a professor at Brooklyn Law School and academic program director of The Center for Urban Business Entrepreneurship. Cities used the program’s Title I funding to engage in what was sometimes called “Negro removal” or “slum clearance.”

Before the federal program was halted in 1974, some 2,500 urban renewal projects displaced about 1 million people nationwide, Reiss said.

“Two-thirds of those people were African-American, and if you think about African-Americans being 12 percent of the population, they were being displaced at a multiple, maybe at five times the rate of other Americans and particularly white Americans,” Reiss said. “So urban renewal really reshapes the urban fabric across the country.”

Property in minority communities tended to be cheaper to acquire, especially during the peak period of urban renewal, and Reiss said minorities also were less equipped to challenge authorities.

“It was structural racism on one level, where the majority would find it much easier to displace a black community than they would to displace a white community, although displacement wasn’t only in black communities — but as we see it’s overwhelmingly in black communities,” he said. “Because black communities were often poor, that would be another reason — being in a poor community would give you less political power to fight something like this.”

February 19, 2020 | Permalink | No Comments

January 29, 2020

Deed of Trust vs. Mortgage

By David Reiss

photo by Taber Andrew Bain

LendingTree quoted me in Deed of Trust vs. Mortgage: Key Differences. It reads, in part,

Foreclosure process

Each type of security instrument leads to a different type of foreclosure process. Deed of trust states typically have a non-judicial foreclosure process. “The trustee has the power under the terms of the deed of trust to actually sell the property,” said David Reiss, professor of law at Brooklyn Law School and real estate expert. “That can happen in some jurisdictions in a matter of weeks or a matter of a few months.”

A deed of trust foreclosure doesn’t involve going to court. In mortgage states, though, the lender must get a court order to foreclose on a home. This is called a judicial foreclosure. “In many jurisdictions, particularly in New York and New Jersey, [a judicial foreclosure] could take years to actually do,” Reiss said. “From a lender perspective, that’s not so great.”

Your state’s laws will determine which security instrument you use and which type of foreclosure process lenders are required to follow. Some states allow both types of foreclosures, but non-judicial foreclosures are more common than judicial foreclosures. The states that primarily use a non-judicial foreclosure process are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Georgia, Idaho, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Oregon, Rhode Island, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wyoming and the District of Columbia.

January 29, 2020 | Permalink | No Comments

October 16, 2019

Teaching Real Estate Securitization

By David Reiss

By U.S. Government Accountability Office from Washington, DC, United States - Figure 1: Securitization of Federally Insured or Guaranteed Mortgages into GinnieMae-Guaranteed MBS, Public Domain, https://commons.wikimedia.org/w/index.php?curid=64986888

Some readers may be interested in a free upcoming program on how to teach real estate securitization.  The program is  co-sponsored by the AALS Real Estate Transactions Section and the New York City Bar Association’s Structured Finance Committee.

You can attend by live stream webcast or in person.  You can attend as much of the program as you have time to attend, and feel free to pop in and out of the webcast.

Law professors and leading practitioners will serve as panelist instructors.  I will be moderating a panel on Servicing & Its Discontents.  It should be a great program for those who teach in this area.

See http://law-u.net/ for the full program and to register or even better, view the PROMOTIONAL VIDEO here.

October 16, 2019 | Permalink | No Comments

September 16, 2019

Housing Finance Reform Endgame?

By David Reiss

The Hill published my column, There is Hope of Housing Finance Reform That Works for Americans.  It opens,

The Trump administration released its long awaited housing finance reform report and it is a game changer. The report makes clear that it is game over for the status quo of leaving Fannie Mae and Freddie Mac in their conservatorship limbo. Instead, it sets forth concrete steps to recapitalize and release the two entities. This has been a move that investors, particularly vulture investors who bought in after the two companies entered into their conservatorships, have clamored for.

It is not, however, one that is in the best interests of homeowners and taxpayers. The report recognizes that there are better alternatives. Indeed, it explicitly states that the “preference and recommendation is that Congress enact comprehensive housing finance reform legislation.” But the report also states that the conservatorships, which are more than a decade old, have gone on for too long. So the report throws down a gauntlet to Congress that if it does not take action, the administration will begin the formal process of implementing the next best solution.

September 16, 2019 | Permalink | No Comments

July 10, 2019

Does Historic Preservation Limit Affordable Housing?

By David Reiss

By Stefan Kühn - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=9413214

I answer that it can in CQ Researcher’s Historic Preservation:  Can The Past Escape The Wrecking Ball?

Many people fail to realize that land use policies like historic preservation involve big trade-offs. The most important one is that if you want to protect existing structures from demolition and modification, you can’t replace them with bigger ones that could house more people. Consider:

  • Historic preservation equals height and density restrictions. New building technologies (think steel girders and elevators) allow buildings to be built higher as time goes by. If a city landmarks a large percentage of its inner core, it restricts the ability of that core to go higher. This can lead to sprawl, as a growing population is pushed farther and farther from the city center.
  • Historic preservation favors the wealthy. Limited supply drives up housing prices and apartment rents, benefiting owners. And low-income and younger households are likely to suffer, as they are least able to bear the cost of the increases compared to other households. Future residents — think Midwesterners, Southerners and immigrants seeking to relocate to a city like New York for job opportunities — will also suffer.
  • It isn’t easy for historic preservation to be green. It feels environmentally responsible to protect older, low-density buildings in city centers because you have no dusty demolition, no noisy construction. But it actually comes at a big environmental cost. Denser construction reduces reliance on cars and thereby lowers carbon emissions. People living in a dense city have a much smaller carbon footprint than those in a car-oriented suburb.

Just because preservation comes at a cost does not mean it is bad. Much of our past is worth protecting. Some places benefit from maintaining their identities — think of the European cities that draw the most tourists year in and year out. But it is bad to deploy historic preservation indiscriminately, without evaluating the costs it imposes on current residents and potential future ones.

Cities that want to encourage entrepreneurship and affordable housing should deploy historic preservation and other restrictive land use tools thoughtfully. Otherwise, those cities will be inhabited by comparatively rich folks who complain about the sterility of their current lives and who are nostalgic for “the good old days” when cities were diverse and hotbeds of creativity.

If they fail to understand the trade-offs inherent in historic preservation, they won’t even understand that a part of the problem is the very policy they support to “protect” their vision of their community.

July 10, 2019 | Permalink | No Comments

July 3, 2019

Two Positions at Detroit Mercy School of Law

By David Reiss

Professor Belian asked me to post the following:

Announcement: Property Law Position

University of Detroit Mercy School of Law seeks a proven or aspiring scholar and teacher with an interest in teaching first-year Property Law for a tenured or tenure-track position beginning 2020-2021.  Applicants must have a law degree and strong academic background and must demonstrate either a record of or potential for both teaching excellence and high scholarly achievement in any area of law.  The balance of the teaching package will be determined in conversation with the successful candidate.

To Apply

Applicants should send a cover letter, which should include a brief description of their ideal teaching package and a general indication of their areas of scholarly interest.  Please direct the cover letter, a current CV, additional supporting materials (if any), and any questions you may have to:

Professor Julia Belian, Chair of Faculty Recruitment

University of Detroit Mercy School of Law

651 East Jefferson

Detroit, Michigan 48226

(belianju@udmercy.edu, 313-596-0225)

Materials will be accepted via email or regular mail.  Review of applicants will begin in July 2019 and will continue until the position is filled.

About Our Program of Legal Education

Detroit Mercy Law offers a unique curriculum that complements traditional theory- and doctrine-based course work with intensive practical learning.  Students must complete at least one clinic, one upper-level writing course, one global perspectives course, and one course within our Law Firm Program, an innovative simulated law-firm practicum.  Detroit Mercy Law also offers a Dual J.D. program with the University of Windsor in Canada, in which students earn both an American and a Canadian law degree in three years while gaining a comprehensive understanding of two distinct legal systems.  Interested Dual J.D. students are fully integrated into upper-level U.S. courses.  The program’s first-year U.S. Property Law module could form a component of the teaching package if desired.

Detroit Mercy Law is located one block from the riverfront in Downtown Detroit, within walking distance of federal, state, and municipal courts, the region’s largest law firms, and major corporations such as General Motors, Quicken Loans, and Comerica Bank.  The School of Law is also uniquely situated two blocks from the Detroit-Windsor Tunnel, an international border crossing linking Detroit with Windsor and Canada.

Detroit offers a dynamic variety of culinary, cultural, entertainment, and sporting attractions.  See https://www.youtube.com/watch?v=DO4J_PC1b5M and learn more at https://www.nytimes.com/2017/11/20/travel/detroit-michigan-downtown.html.

Michigan’s largest, most comprehensive private university, University of Detroit Mercy is an independent Catholic institution of higher education sponsored by the Religious Sisters of Mercy and Society of Jesus.  The university seeks qualified candidates who will contribute to the University’s urban mission, commitment to diversity, and tradition of scholarly excellence.  University of Detroit Mercy is an Equal Opportunity Affirmative Action Employer with a diverse faculty and student body and welcomes persons of all backgrounds.

*************************************************

Announcement: International Intellectual Property Clinic Director

University of Detroit Mercy School of Law seeks applicants for a tenured or tenure-track position to teach in and direct the International Intellectual Property Law Clinic starting with the 2020-21 academic year.

The Clinic

The International Intellectual Property Law Clinic is certified by the USPTO for both patent and trademark law and serves the burgeoning creative and entrepreneurial community in Detroit.  In 2012, the USPTO chose Detroit as the location for its first satellite office because Detroit and its surrounding communities are home to one of the largest concentrations of intellectual property attorneys in the United States.  Part of a growing Intellectual Property program at Detroit Mercy Law, the International Intellectual Property Law Clinic hosts the annual International Patent Drafting Competition, which is held at the Elijah J. McCoy Midwest Regional USPTO each February.  The Competition attracts teams from law schools across the United States and Canada.  Detroit Mercy Law also offers an on-line Certificate in Law – Intellectual Property. This non-JD program meets the needs of professionals and organizations for knowledge of intellectual property and cybersecurity laws.

Requirements

Applicants must

  • Have a law degree and strong academic background.
  • Demonstrate either a record of or potential for both teaching excellence and high scholarly achievement.
  • Be either a registered patent attorney, a patent agent in good standing with the USPTO, or a licensed attorney in good standing with the highest court of any state.

Ideal candidates will also possess at least three years’ experience (within the past five years) prosecuting patent applications before the USPTO.  Applicants with some experience teaching in a law clinic are preferred, and applicants who are excited about continuing to grow our Intellectual Property Law program, in addition to directing the existing Clinic, are of particular interest.

To Apply

Applicants should send a cover letter with a current CV and any additional supporting materials (or any questions) to:

Professor Julia Belian, Chair of Faculty Recruitment

University of Detroit Mercy School of Law

651 East Jefferson

Detroit, Michigan 48226

(belianju@udmercy.edu, 313-596-0225)

Materials will be accepted via email or regular mail.  Review of applicants will begin in July 2019 and will continue until the position is filled.

About Our Program of Legal Education

Detroit Mercy Law offers a unique curriculum that complements traditional theory- and doctrine-based course work with intensive practical learning.  Students must complete at least one clinic, one upper-level writing course, one global perspectives course, and one course within our Law Firm Program, an innovative simulated law-firm practicum.  Detroit Mercy Law also offers a Dual J.D. program with the University of Windsor in Canada, in which students earn both an American and a Canadian law degree in three years while gaining a comprehensive understanding of two distinct legal systems.

The Detroit Mercy Law Clinical Program is one of the oldest in the United States, having opened our doors as the Urban Law Clinic in 1965. Today, we offer eleven clinics, including the Criminal Trial Clinic, Environmental Law Clinic, Family Law Clinic, Federal Pro Se Legal Assistance Clinic, Housing Law Clinic, Immigration Law Clinic, Juvenile Appellate Clinic, International Intellectual Property Law Clinic, Trademark and Entrepreneurial Clinic, Veterans Appellate Clinic, and Veterans Law Clinic. Each year our clinics represent more than 1,000 clients and provide more than 20,000 hours of free legal services.

Detroit Mercy Law is located one block from the riverfront in Downtown Detroit, within walking distance of federal, state, and municipal courts, the region’s largest law firms, and major corporations such as General Motors, Quicken Loans, and Comerica Bank.  The School of Law is also uniquely situated two blocks from the Detroit-Windsor Tunnel, an international border crossing linking Detroit with Windsor and Canada.

Detroit offers a dynamic variety of culinary, cultural, entertainment, and sporting attractions.  See https://www.youtube.com/watch?v=DO4J_PC1b5M and learn more at https://www.nytimes.com/2017/11/20/travel/detroit-michigan-downtown.html.

Michigan’s largest, most comprehensive private university, University of Detroit Mercy is an independent Catholic institution of higher education sponsored by the Religious Sisters of Mercy and Society of Jesus.  The university seeks qualified candidates who will contribute to the University’s urban mission, commitment to diversity, and tradition of scholarly excellence.  University of Detroit Mercy is an Equal Opportunity Affirmative Action Employer with a diverse faculty and student body and welcomes persons of all backgrounds.

July 3, 2019 | Permalink | No Comments