REFinBlog

Editor: David Reiss
Cornell Law School

October 6, 2016

Thursday’s Advocacy & Think Tank Roundup

By Robert Engelke

  • This working paper by the Joint Center for Housing Studies of Harvard compares rental housing in 12 countries in Europe and North America, using individual records from household surveys. Differences in housing characteristics, conditions, and costs across countries reflect a number of factors, including demographics, geography, culture, and government policies.
  • An article by Housing Horizon begins: The cost of single-family construction varies throughout the nation, but generally speaking the cost to develop a single-family home on a plot of land is greater than the comparable cost of other housing types such as twin homes, townhomes, condominiums, etc.  Given the additional expense, should affordable single-family homeownership be considered a viable form of affordable housing for the future?

October 6, 2016 | Permalink | No Comments

October 5, 2016

National Survey of Mortgage Originations

By David Reiss

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The Federal Housing Finance Agency has issued a request for comments on the National Survey of Mortgage Originations. The NSMO is

a recurring quarterly survey of individuals who have recently obtained a loan secured by a first mortgage on single-family residential property. The survey questionnaire is sent to a representative sample of approximately 6,000 recent mortgage borrowers each calendar quarter and typically consists of between 90 and 95 multiple choice and short answer questions designed to obtain information about borrowers’ experiences in choosing and in taking out a mortgage.

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The NSMO is one component of a larger project, known as the “National Mortgage Database” (NMDB) Project, which is a multi-year joint effort of FHFA and the Consumer Financial Protection Bureau (CFPB) (although the NSMO is sponsored only by FHFA). The NMDB Project was created, in part, to satisfy the Congressionally-mandated requirements of section 1324(c) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008 (Safety and Soundness Act). Section 1324(c) requires that FHFA conduct a monthly survey to collect data on the characteristics of individual prime and subprime mortgages, and on the borrowers and properties associated with those mortgages, in order to enable it to prepare a detailed annual report on the mortgage market activities of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) for review by the appropriate Congressional oversight committees. Section 1324(c) also authorizes and requires FHFA to compile a database of timely and otherwise unavailable residential mortgage market information to be made available to the public. (81 F.R. 62889)

Obviously, this is another post on a technical subject that is not for the faint of heart, but it is very important for the health of the mortgage market. During the Subprime Boom of the early 2000s, mortgage characteristics changed so quickly that information became outdated within months.  Policymakers and academics did not have good access to newest data and thus were operating, to a large extent, in the dark.

The information in the NSMO will not only help regulators, but will also outside researchers to “more effectively monitor emerging trends in the mortgage origination process . . ..” (81 F.R. 62890) The FHFA requests comments on whether “the collection of information is necessary for the proper performance of FHFA functions, including whether the information has practical utility.” (Id.) The FHFA is also looking for comments on ways “to enhance the quality, utility, and clarity of the information collected.” (Id.) Those with an interest in securing a safe future for our mortgage markets should take a look at the survey instrument (attached to the Comment Request) and respond to the FHFA’s request. Comments are due on or before November 14, 2016.

October 5, 2016 | Permalink | No Comments

Wednesday’s Academic Roundup

By Robert Engelke

October 5, 2016 | Permalink | No Comments

October 4, 2016

Good Fence Negotiations Make Good Neighbors

By David Reiss

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Realtor.com quoted me in How to Build a Fence Without Ending Up in a Feud With Your Neighbors. It opens,

Good fences make good neighbors, but how do you make a good fence, exactly? After all, it’s not just a question of marking the division between two pieces of property. Do you and your neighbor both have a say on the height, style, and color—and should you split the costs evenly?

If you’re facing any of these questions as you contemplate some fence work, read on.

Does your neighbor have a say on your fence?

Whether your neighbor can weigh in depends largely on where you live, according to Marc Markel of Roberts Markel Weinberg Butler Hailey in Texas. Laws and regulations vary by state: In California, for instance, the “good neighbor fence” law requires neighbors to split the cost evenly.

To find your own local regulations, search online for “fence permit” along with your county and/or state. You can also visit statelocalgov.net: Click on your state and county to get to your local government’s website, where you can find info on fence permits or a phone number under “planning and zoning” to get your questions answered.

Fences may also be regulated by a homeowners association and/or your home’s restrictive covenant, which is typically found in your property deed and states how your land can be used.

For example, the height limit for fences is typically 6 feet for back and side fences and 4 feet for front-yard fences. Some covenants will spell out how repairs and new fences should be handled between neighbors—even if you build the fence entirely on your own property—while others will not. If there are no stated restrictions, then it’s basically up to you and your neighbor to work it out together, hopefully in a friendly manner.

David Reiss, a professor at Brooklyn Law School, says it’s always best to get your neighbor’s input rather than just forging ahead. In the best-case scenario, “they may volunteer to share the cost 50-50,” he points out. Plus, there may be aesthetic issues to discuss: “Do you save money by installing a cheaper fence with a front and a back, or do you spend more money and get a fence that looks good on both sides?”

Your neighbors may have strong feelings about these issues. It’s better to hear them out sooner rather than later.

October 4, 2016 | Permalink | No Comments

October 3, 2016

Historic Preservation and Affordable Housing

By David Reiss

photo by Ebyabe

Lior Strahilevitz has posted Historic Preservation and Its Even Less Authentic Alternative to SSRN. The abstract reads,

Historic preservation regulations are costly, contentious, and – as best we can tell – tend to promote residential segregation. Preservation as practiced in the United States also tells historical tales in a way that is inevitably selective, often more attuned to contemporary needs than historical objectivity, and likely to signal current residents and visitors about whose stories aren’t worth commemorating. Yet historical preservation, even to its critics, can further desirable goals. This essay examines traditional historic preservation strategies while also considering two potential alternatives, neither of which has received much attention.

The first alternative to traditional historic preservation – fake history – is employed on a large scale in the fastest growing residential community in the United States. The essay provides a case study of the use of fake history and theming in The Villages, Florida, revealing both the strategy’s potential for generating low-cost cultural resonance and its pitfalls. The possible connections between The Villages’ omnipresent theming and its disturbingly homogenous demographics are explored. The essay suggests that The Villages’ alternative to historic preservation might be replicated elsewhere and speculates about the demographic results of efforts to create more inclusive fake historical narratives.

A second, and novel, alternative to traditional historic preservation would select sites for historic preservation restrictions at random within a given community. Many of the problems associated with the way historic preservation regulations are implemented in the United States stem from the arbitrary and occasionally ugly battles over what to preserve and what to erase. Historic preservation becomes a battlefield for cultural warfare. Compared with this alternative, the case for randomly preserving in each city a few blocks that date from each particular era, while letting market forces dictate what gets preserved or destroyed elsewhere, may be surprisingly strong.

While I do not like either of these novel alternatives, we would certainly benefit from fresh thinking about what we are trying to achieve with historic preservation. Historic preservation remains too much of a niche area of regulation dominated by the few who feel most strongly about it. It has slowly but surely increased its reach in cities like New York. But it has not been accompanied by much serious thinking by broader constituencies about the costs and benefits of each incremental step.

There are obvious trade-offs with landmarking that don’t just affect landowners and developers. By restricting new construction, landmarking tends to restrict the supply of new housing units. This might be okay, but we should certainly think through those costs before just letting preservation districts cover more and more of a city. I am not particularly interested in communities based on fake history, but others are welcome to them. For me though, I am concerned that our most important cities might end up like Paris — stunning historic playgrounds for the wealthy, encircled by high-rise ghettos for the poor.

October 3, 2016 | Permalink | No Comments

Monday’s Adjudication Roundup

By Robert Engelke

October 3, 2016 | Permalink | No Comments