I was interviewed by the Canadian Broadcasting Company in Special Counsel to Investigate Biden’s Handling of Classified Documents. The clip explains that a “special counsel has been named to investigate U.S. President Joe Biden’s handling of two batches of classified documents after more sensitive government materials were found in his personal home.”
Insider quoted me in A Controversial Fix for America’s Housing Market: More Foreclosures. It opens,
How many people should lose their homes to foreclosure?
In an ideal world, of course, there would be no foreclosures at all. Everyone who buys a home would get one that fits their income and needs, and people would have enough money to make their mortgage payments on time and in full. But in a housing market built on debt, foreclosures are a painful reality. People lose their jobs or fall behind on payments, and lenders repossess the home to recoup their losses.
Too many foreclosures is obviously a bad thing — losing a home is devastating both financially and emotionally — but it’s also a problem to have too few foreclosures. Low rates of foreclosure activity signal that housing lenders aren’t taking enough risk, locking out hopeful buyers who could have kept up with payments on their mortgage if only lenders gave them the chance.
Most residential loans are backed by the government-sponsored enterprises Fannie Mae and Freddie Mac or the Federal Housing Administration. To try to find a happy medium of risk, the GSEs — government-sponsored enterprises — and FHA set a “credit box” to determine who gets a mortgage. The companies base these standards on factors including the borrower’s financial stability and the state of the housing market and economy. When the credit box gets tighter, fewer people get mortgages, and foreclosures generally go down. When it opens up, banks take more risks on people with lower credit scores or worse financial histories, increasing the possibility of foreclosures.
Finding the right size for the credit box is easier said than done. In the years leading up to the Great Recession, banks and private lenders handed out millions of risky loans to homebuyers who had no hope of repaying them. A tidal wave of foreclosures followed, plunging the US housing market — and the global economy — into chaos.
But some experts argue that in the years since the crash, the GSEs, lenders, and regulators overcorrected, shutting loads of potentially reliable buyers out of the housing market. Laurie Goodman, the founder of the Housing Finance Policy Center at the Urban Institute, a nonpartisan think tank, said there’s room today to “open the credit box” and relax lending standards without pushing the housing market into crisis. More foreclosures might come as a result, she said, but that would be “a worthwhile trade-off” if it gave more people the opportunity to build wealth through homeownership.
Opening the credit box isn’t a cure-all for housing, and given the weakening economy, more cautious experts argue that making it easier to get a mortgage is unnecessary or dangerous. But if lenders do it correctly, it could be a major step toward a healthier market. A more stable credit box over time could not only ensure future homebuyers aren’t locked out of getting the home of their dreams, but could also smooth out some of the market’s chaotic nature.
The ‘invisible victims’ of the housing market
In the aftermath of the Great Recession, the victims of the housing free-for-all were clear. An estimated 3.8 million homeowners lost their homes to foreclosure from 2007 to 2010, and plenty more also lost theirs in the following years. But the overly strict lending standards and tighter regulations that followed created a new class of victims: people who were unable to join the ranks of homeowners. David Reiss, a professor at Brooklyn Law School, called these would-be homebuyers “invisible victims” — people who probably could have stayed current on their payments if they’d been approved for a loan but who didn’t get that opportunity.
Indira Stewart (left) and the rest of the TVNZ Breakfast Team
I was interviewed by Indira Stewart on the TVNZ Breakfast show, the biggest morning news show in New Zealand, about New York City’s system of rent regulation (I serve as the Chair of the NYC Rent Guidelines Board). You can find the interview here.
Financing by Nick Youngson CC BY-SA 3.0 Alpha Stock Images
Ernira Mehmetaj and I published The Promise and Perils of Shared Equity Financing in the ABA’s Probate and Property magazine. It opens,
It is the rare homeowner, or even lawyer, who thinks twice about why mortgages are part of so many real estate transactions. Real estate is expensive, and few have the money to pay for a home all in cash. As a result, people enter in transactions with mortgage lenders and are exposed to all of the risks that come along with that type of financing: default, late fees, foreclosure.
If you stripped away all of our history and our current practices in financing home ownership with mortgages, you might ask how could people with limited assets acquire something as expensive as a home? It turns out that there are all sorts of ways to slice and dice the rights and responsibilities of homeownership to offer households just the aspects they want and no more.
A new development, shared equity financing, will make us all think twice about mortgages. Its sharing of the risks and rewards of a home purchase will be attractive to many, but it also has its own share of perils that are unique to it.
Professor Shelby Green
I will be presenting on Non-Debt Financing for Home Purchase: Risks and Promises as part of the ABA’s Section of Real Property, Trust and Estate Law “Professors’ Corner.” It will take place at 12:30 PM (Eastern Time) on June 9th. The program is free for ABA members and non-members alike, although registration is required. Professor Shelby D. Green of Pace University’s Elisabeth Haub School of Law will moderate. The program description reads:
A new class of financing options is emerging, including non-debt or equity investment, either facilitating the initial purchase with no borrowing or enabling access to equity from existing homeownership. The presenter will discuss whether the surface appeal of these financing inventions may camouflage risks that if not disclosed and well-managed could portend disruption in the housing markets.
Update: The slides for the presentation can be found here.
Dean Michael Cahill
In many ways, COVID-19 has changed the way we live for both the immediate future and long-term. Brooklyn Law School Dean Michael Cahill has been sitting down with members of the Brooklyn Law School faculty to discuss the legal ramifications of our response to COVID-19 and what a post-pandemic world may look like. Here is the link to our discussion of the effect of the pandemic on the real estate market and beyond: https://youtu.be/j9DFBOsU3qw.
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 https://law-u.net/ for the full program and to register or even better, view the PROMOTIONAL VIDEO here.
