September 30, 2022
Law360 published my column, Time To Rethink The Federal Home Loan Bank System. It opens,
The Federal Housing Finance Agency is commencing a comprehensive review of an esoteric but important part of our financial infrastructure this month. The review is called “Federal Home Loan Bank System at 100: Focusing on the Future.”
It is a bit of misnomer, as the system is only 90 years old. Congress brought it into existence in 1932 as one of the first major legislative responses to the Great Depression. But the name of the review also signals that the next 10 years should be a period of reflection regarding the proper role of the system in our broader financial infrastructure.
Just as the name of the review process is a bit misleading, so is the name of the Federal Home Loan Bank system itself. While it was originally designed to support homeownership, it has morphed into a provider of liquidity for large financial institutions.
Banks like JPMorgan Chase & Co., Bank of America Corp., Citibank NA and Wells Fargo & Co. are among its biggest beneficiaries and homeownership is only incidentally supported by their involvement with it.
As part of the comprehensive review of the system, we should give thought to at least changing the name of the system so that it cannot trade on its history as a supporter of affordable homeownership. But we should go even farther and give some thought to spinning off its functions into other parts of the federal financial infrastructure as its functions are redundant with theirs.
September 26, 2022
I published How Fintech Cos. May Transform Real Estate Investment along with Joseph Bizub and Justin Peralta in Law360. It opens,
Until relatively 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 sole purview of small investors who invested locally.
Today, because of technological advances, these owner-occupants and investors face significant competition from institutional investors and an emerging class of decentralized finance investors.
These fintech companies are bringing new approaches to the challenges that real estate investing traditionally poses: illiquidity, lack of capital, lack of diversification and uneven access to market information.
This article focuses on how decentralized finance investors in particular are meeting those challenges and suggests that while much of their vaunted innovation is simply old wine in new bottles, there is good reason to think that they will be driving a lot of investment in small real estate transactions in the future, in no small part because people like shiny new bottles.
September 23, 2022
I was interviewed by Reuters in Explainer: What New York’s lawsuit means for Trump regarding the lawsuit that New York Attorney General James filed against former President Trump and others in his circle. The video is here. The transcript reads in part,
The lawsuit seeks to have Trump and the other defendants give up $250 million in what she says were false financial gains.
James is also seeking to bar Trump and three of his children – Donald Trump Jr, Eric Trump and Ivanka Trump – from serving as directors of companies registered in New York…
and prevent them and their company from buying commercial real estate or getting bank loans in New York state for five years.
She is also seeking to appoint an independent monitor at the Trump Organization to oversee various aspects of its business for five years.
Trump, who is considering running again for president in 2024, is expected to contest the litigation. But David Reiss, a professor at Brooklyn Law School, sees another possibility…
“…He’s been very effective at pushing final outcomes in his legal battles years down the road, and maybe that’s a good enough strategy for him. That’s possible. The other possibility, even though he doesn’t say this on Twitter, is he may settle.”
May 2, 2022
David Reiss CC BY-NC-SA
Linda Fisher recently posted a pdf of The Foreclosure Echo: How the Hardest Hit Have Been Left out of the Economic Recovery, a book she co-authored with Judith Fox. It came out before the pandemic, so you might have missed it. The abstract reads,
This book tells the story of the foreclosure crisis from a new perspective – that of ordinary people who experienced it. This angle has not been thoroughly communicated before now. The authors are legal academics who have worked for decades defending low- to moderate-income people from foreclosure and challenging predatory lending practices. They have a wealth of experience representing people whose American Dream was shattered when they were threatened with losing their homes. Using actual experiences – often examined through a legal lens – supplemented by economic, social science and legal research, The Foreclosure Echo explains how people experienced the crisis and how their lenders and public institutions let them down. The book also details the lingering effects of the crisis – such as vacant and abandoned buildings – and how these effects have magnified inequality. Finally, the book suggests reforms that could help avoid another crisis.
It is a timely read, and it resonates with some of the challenges homeowners will face as the consequences of the pandemic work themselves out in the housing market with the expiration of the various foreclosure moratoria that were in effect during the earlier stages of the pandemic.
April 27, 2022
Debra Bechtel, Crystal Liu, Ernira Mehmetaj, and I have just posted Sharing Your Home with Strangers: Common-Interest Ownership and Financing Options to SSRN (as well as to bepress). The abstract reads,
As the affordable housing crisis in the U.S. escalates, housing policy analysts and advocates are re-examining, modifying, and combining ways of decreasing the costs of homeownership through shared owner-ship and shared financing while also, in some instances, preserving long-term affordability. This Article will touch upon the vast array of models and take a deep dive into one of them, the relatively new shared equity financing model. That model holds some promise and a lot of peril for homeowners.
October 29, 2021
The White House hosted an event today on Reducing Land Use and Zoning Restrictions. While the event was pretty short — an hour or so — it had a bunch of heavy hitters presenting, including Professor Edward Glaeser of Harvard. For many years, Glaeser has written about how local land use laws restrict the construction of housing. It is great to see the White House taking this issue so seriously as it has a massive impact on the affordability of housing as well as the ability of people to move to places with lots of jobs, like the Bay Area.
This effort is part of Biden’s Build Back Better Plan, which is intended, in part, to
- Incentivize the removal of exclusionary zoning and harmful land use policies. For decades, exclusionary zoning laws – like minimum lot sizes, mandatory parking requirements, and prohibitions on multifamily housing – have inflated housing and construction costs and locked families out of areas with more opportunities. President Biden’s plan seeks to help jurisdictions reduce barriers to producing affordable housing and expand housing choices for people with low or moderate incomes. The Build Back Better Plan will create an incentive program that awards flexible and attractive funding to jurisdictions that take concrete steps to reduce barriers to affordable housing production.
The Biden Administration seems to be picking up the gauntlet from previous administrations (here and here) that have made reducing land use restrictions on housing an initiative worth pushing. As opposed to the last two administrations, however, the Biden Administration is taking up the issue earlier in its tenure, so its push may have more legs than the ones that preceded it.