August 14, 2015
American Banker quoted me in Banks Take Losses in MBS Case Appeals; Is Supreme Court Next? (behind a paywall) The story reads, in part,
Banks that sold faulty mortgage-backed securities right before the crisis have suffered a string of legal defeats over the timing of government lawsuits, but some experts believe the industry may still have a shot in the Supreme Court.
Since the crisis regulators have brought a slew of actions against big banks for assets they sold to acquirers that ultimately failed. But in some cases, the parties have tussled over whether the government missed the statutory deadline for bringing a claim.
Appeals courts lately have disagreed with banks that plaintiffs missed court filing deadlines imposed by state law and other regimes, which are stricter than deadlines in federal law. Most recently, the U.S. Court of Appeals for the 5th Circuit ruled in favor of the Federal Deposit Insurance Corp. in the agency’s case against RBS Securities and other issuers related to the 2009 failure of Guaranty Bank.
Still, other cases are pending and some say banks may be emboldened after the Supreme Court last year favored state-mandated timelines in an environmental case.
“I would expect that [banks] would continue to try to pursue the issue and get relief from the Supreme Court,” said Paul Rugani, a partner at Orrick, Herrington & Sutcliffe LLP based in Seattle.
The government has sought billions from MBS issuers that officials say misrepresented the quality of securities leading up to the crisis. The FDIC and National Credit Union Administration sued companies that had sold assets to institutions that ultimately failed, and the Federal Housing Finance Agency brought claims over securities sold to Fannie Mae and Freddie Mac.
But many banks have fought the agencies over whether they could bring the suits in the first place. Defendants seemed to gain ground in the lower courts and when the Supreme Court handed down its decision last year in a North Carolina environmental case.
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“The Supreme Court generally does not take a case where there isn’t a split among different circuit appeals courts, and the 5th and 10th circuits are in agreement,” said an attorney familiar with the situation.
But other decisions are still pending. Rulings have yet to come from the 9th circuit as well as a separate case still to be decided in the 2nd circuit. Both involve the FDIC’s extender statute related to MBS losses at the failed Colonial Bank.
“I would think that the parties that lost the case would wait for the 2nd and 9th circuits to decide and then hope that either of them disagrees with the 5th circuit before deciding to take the case up to the Supreme Court,” said Sanford “Sandy” Brown, a partner at Bracewell & Giuliani LLP.
Others said the extender statute in the law at issue in the Supreme Court’s environmental decision – the Comprehensive Environmental Response, Compensation, and Liability Act – is different enough from the extender statute in FIRREA that the justices on the high court may want to weigh in.
The 5th circuit decision “is a well-reasoned opinion, but there is no question that such an interpretation could be challenged in an appeal to the Supreme Court,” said David Reiss, a professor at Brooklyn Law School. “While circuit courts have had a consistent interpretation of the FIRREA extender statute, there is enough interpretation going on that the Supreme Court could come up with a reasonable alternative to the courts of appeal that have ruled on this issue.”
- HUD releases report of its activities, for instance, to assess its efforts on homelessness, housing vouchers, energy efficiency in multifamily housing.
- The Government Accountability Office releases report, which finds that “qualified mortgage (QM) and qualified residential mortgage (QRM) regulations are unlikely to have a significant effect on the availability or securitization of mortgages in the current market.”
- CFPB releases “2015 Plain Writing Act Compliance Report”, which gives information about what documents executive agencies are required to use plain language in.
- CFPB releases report on eClosings, finding that they can benefit consumers.
August 13, 2015
HSH.com quoted me in Buying A Home After Retirement Is Possible, but Challenging. It reads, in part,
The ideal situation is to enter your retirement years without any monthly mortgage payments. But what if you’ve finally found your dream home at the same time that you’re leaving the working world? What if you’re ready to buy a home in a new city in which you’ve always wanted to live, but you’re approaching your 70th birthday?
The good news is that the federal Equal Credit Opportunity Act law prohibits lenders from denying potential borrowers because of their age. The bad news is that you’ll have a mortgage payment and the burden of caring for a house in your retirement years.
“It can be bad to have a mortgage payment in your 80s,” says Keith Baker, professor of mortgage banking at North Lake College in Irving, Texas. “All sorts of things can happen to you, unfortunately. What if you develop Alzheimer’s? What if your children aren’t financially sophisticated and can’t take over handling your mortgage for you? There are all kinds of reasons not to have a mortgage when you’re that age. But if you can afford a mortgage payment when you’re in your 60s and early 70s and you’re in good health, why not buy that home that you’ve always wanted?”
If you want to buy a home after you’ve retired, you’ll need to first consider several factors, and you’ll need to overcome a variety of hurdles both to qualify for a mortgage loan and to find a home that fits your changing needs as you get older.
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Many borrowers apply for 30-year loans because they generally come with the lowest monthly payments. But such a long-term loan might not make sense for borrowers who are already in their retirement years, says David Reiss, professor of law and research director for the Center for Urban Business Entrepreneurship at Brooklyn Law School in New York City.
“If you are 62, you will not have paid [the loan] off until you are 92,” says Reiss. “Retirees should look at their expected incomes over those 30 years to ensure that they have sufficient income to cover the mortgage over the whole period.”
Income can fluctuate during the retirement years. Maybe payments from a legal settlement run out. You might struggle to find renters for your investment properties. Royalties can dwindle. At the same time, expenses — especially medical ones — might rise.
Reiss says that it makes sense for retirees to take out a loan with a shorter term, such as a 15-year fixed-rate loan, if they can afford the higher monthly payments that come with such loans.
August 12, 2015
- Housing Markets and Unconventional Monetary Policy, Charles Rahal.
- The Effect of Housing Wealth Shocks on Work and Retirement Decisions, Jaclene Begley & Sewin Chan.
- Millennials, Baby Boomers, and Rebounding Multifamily Home Construction, Jordan Rappaport, Federal Reserve Bank of Kansas City Working Paper.
- House Money and Entrepreneurship, Sari Pekkala Kerr, William R. Kerr & Ramana Nanda, Harvard Business School Entrepreneurial Management Working Paper No. 15-069.
- The Rescue of Fannie Mae and Freddie Mac, W. Scott Frame, Andreas Fuster, Joseph S. Tracy, & James I. Vickery, FRB Atlanta Working Paper No. FEDAWP2015-02.
- Second Homes: Households’ Life Dream or (Wrong) Investment?, Marianna Brunetti & Costanza Torricelli, CEIS Working Paper No. 351.
- Holding Deposit Agreements: Pre-Tenancy Obligations and Rights, Samuel Beswick, Landlord & Tenant Review, vol. 19(4), pp. 143-147, 2015.
- Housing Tenure and Unemployment, Richard K. Green & Bingbing Wang.
- The Consumer Financial Protection Bureau recently released a compliance bulletin regarding Amendment to the Interstate Land Sales Full Disclosure Act. The bulletin provides information to interested parties, primarily developers, regarding the extension of exemption from registration and disclosure requirements of the sale of a condiminium, which is not exempt under other provisions.
- The Federal Transportation Administration (FTA) has released Final Interim Guidance regarding its Capital Investment Grant Program. This guidance provides a greater level of detail with respect to the methods of evaluation used in funding decisions. According to Enterprise Community Partners, “…the incorporation of affordable housing criteria in the evaluation framework has been effective in promoting such coordination. The revised guidance reaffirms those elements and makes two minor adjustments to the affordable housing portion of the land use rating criteria: project sponsors will now have more flexibility in certifying affordable housing data, and transit projects reaching counties with more affordable housing will receive a scoring bonus.”