Academia

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An academic, according to Wikipedia, is a person who works as a researcher (and usually teacher) at a university, college, or similar institution in post-secondary (tertiary) education. He or she is nearly always an advanced degree holder. In the United States, the term academic is approximately synonymous with that of the job title professor although in recent decades a growing number of institutions are also including academic or professional librarians in the category of "academic staff." In the United Kingdom, various titles are used, typically fellow, lecturer, reader, and professor (see also academic rank), though the loose term don is often popularly substituted. The term scholar is sometimes used with equivalent meaning to that of "academic" and describes in general those who attain mastery in a research discipline. It has wider application, with it also being used to describe those whose occupation was researched prior to organized higher education. (http://en.wikipedia.org/wiki/Academia)

Stories from Academia

Wednesday, December 4th, 2013

The documentary, directed by Emmy Award-winning filmmakers Joe and Harry Gantz ("Taxicab Confessions," "The Defenders"), follows eight families struggling in the wake of the economic downturn. Shot over the winter of 2011-12 in Portland, this powerful film reveals the human impact of budget cuts to social services, rising poverty and economic inequality, and the fracturing of the American Dream.

http://www.law.seattleu.edu/news-and-features/news/2013-news-archives/fm...

Monday, December 2nd, 2013

Respected real estate analysts now forecast that the U.S. is poised to experience a renewed round of home mortgage foreclosures over the coming 6 years. Up to 11 million underwater mortgages will be affected. Neither our families, our neighborhoods, nor our state and national economies can bear a resumption of crisis on this order of magnitude.

I argue that ongoing and self-worsening slump in the primary and secondary mortgage markets is rooted in a host of recursive collective action challenges structurally akin to those that brought on the real estate bubble and bust themselves. Collective action problems of this sort require duly authorized collective agents for their solution. At present, the optimally situated such agents for purposes of mortgage market clearing are municipal governments exercising their traditional eminent domain authority.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2038029

Monday, November 25th, 2013

The Paper Chase is not exactly a short article, but if you're the type that's into reading about UCC Article 3 vs. Article 9 transfer methods for notes and MERS, then this piece is for you. There's a lot of technical stuff in the article, but there's also a discussion of the political economy of mortgage title and transfer law, and some thoughts on how to fix the legal mess we currently have.  Abstract is below the break:

The mortgage foreclosure crisis raises legal questions as important as its economic impact. Questions that were straightforward and uncontroversial a generation ago today threaten the stability of a $13 trillion mortgage market: Who has standing to foreclose? If a foreclosure was done improperly, what is the effect? And what is the proper legal method for transferring mortgages? These questions implicate the clarity of title for property nationwide and pose a too- big-to-fail problem for the courts.

http://www.creditslips.org/creditslips/2013/11/securitization-foreclosure-and-the-uncertainty-of-mortgage-title.html

Monday, November 25th, 2013

The Dodd-Frank Act provides that failure to verify a borrower's ability to pay on a home mortgage entitles the borrower to a "asset a violation...as a matter of defense by recoupment or set off". 15 USC 1640(k).   It's not clear me how this provision will play out in the context of nonjudicial foreclosures.  Does the ability to "assert a violation...as a matter of defense by recoupment or set off" enable borrowers to turn all nonjudicial foreclosures into judicial foreclosures?

http://www.creditslips.org/creditslips/2013/10/qm-and-nonjudicial-forecl...

Friday, November 22nd, 2013

Mortgage investment entails two principal types of risk: interest rate risk and credit risk. Credit risk is the risk that the borrower will default on the mortgage. Interest rate risk is the risk that interest rates will either rise — in which case the interest rate the inves tor earns on the mortgage will be below market — or that interest rates will fall — in which case the mortgage will now be at an above market rate, but with the borrower likely to refinance. The mortgage securitization market can be roughly divided in to two types of securitizations based on their allocation of interest rate and credit risk: GSE and Ginnie Mae securities ( “Agency MBS” ) and private - label mortgage - backed securities ( “PLS” ) .

http://www.creditslips.org/files/levitin-senate-banking-testimony-10-1-1...

Thursday, November 21st, 2013

Year Six of the great foreclosure crisis came to a close on June 30 with no real end in sight.  Five million homes have been foreclosed and another million or more were surrendered by distressed home owners in short sales or otherwise.  We are still far from returning to a stable mortgage market.  In normal times (from 1942 to 2005 for example) about 1% of mortgages are in the foreclosure process at any given time, and another 4% or so are delinquent.  At June 30, about 7% of mortgages are delinquent and more than 3% are in the foreclosure process. These distress rates are down from their peak (10%/4.6%) of March 2010, but are still double to triple their pre-crisis levels.

http://www.creditslips.org/creditslips/2013/10/foreclosure-crisis-update...

Monday, November 18th, 2013

Putting aside the optics, I think there's an interesting legal issue possibly raised by the present case, Henning v. Wachovia:  does federal preemption under the Home Owners Loan Act (HOLA) apply to a mortgage that was made by Wachovia FSB, but is now owned by Wells Fargo, N.A.?  HOLA preemption only applies to federal savings and loans, not to national banks. So if a federal S&L makes a loan and holds it on balance sheet, it would seem clear that HOLA preemption would be relevant. But what if that federal S&L sold the loan to, say, me? Could I invoke HOLA preemption? That is, does HOLA preemption travel with the loan or is it personal to the federal S&L?

http://www.creditslips.org/creditslips/2013/09/is-federal-preemption-ass...

Thursday, November 14th, 2013

Who else is able to call up the AG and just get a meeting like that when their firm is under criminal investigation?  Do other citizens get talk things through mano-a-mano with the AG himself? That Dimon even thought to initiate direct contact with Holder suggests that he has no sense of his place in society--or perhaps that he in fact does.  Bottom line is that Dimon (and JPM) shouldn't get any more special treatment than any other citizen, but it sure looks like he did.

http://www.creditslips.org/creditslips/2013/09/is-this-normal-can-i-get-...

Monday, November 11th, 2013

It's just me, Professor Porter writing. And what I wanted to write about is the first in a series of thoughts that I have about where mortgage servicing policy needs to go in the future. My first topic where think mortgage servicing needs more conversation and reform is the role of the FHFA and Fannie/Freddie in having fostered/enabled/encouraged some of the unsavory practices in mortgage servicing through their servicing guidelines.

http://www.creditslips.org/creditslips/2013/11/the-frontiers-of-mortgage...

Thursday, November 7th, 2013

We analyze 4,280 lower-income homeowners in the United States who were more than 90 days late paying their 30-year fixed-rate mortgages. Two dozen organizations serviced these mortgages and initiated foreclosure between 2003 and 2012. We identify wide variation between mortgage servicers in their likelihood of bringing the property to auction. We also show that when homeowners in foreclosure filed for bankruptcy, foreclosure auctions were 70% less likely.

http://www.creditslips.org/creditslips/2013/10/new-empirical-paper-on-ho...

Monday, November 4th, 2013

I recently stumbled on this excellent compendium of more than 300 books on the financial crisis.  It also includes a list of 25 or so books that predicted the crisis, as well as a useful link to an annotated list of individuals who can be given credit for predicting various aspects of the crisis.

http://www.creditslips.org/creditslips/2013/09/crisis-books.html

Friday, November 1st, 2013

I hope that bank regulators (and Congress) start asking why banks are willing to fund loans that they aren't willing to make directly themselves because of reputational concerns. The current situation looks a lot like a rent-a-BIN variation:  instead of the bank providing the front to avoid usury laws or to enable MC/Visa card issuance, here we have the rent-a-finance-company situation, with the banks basically undertaking predatory lending behind the mask of the finance companies. Specifically, it sure looks as if NY banks were financing on-line payday lenders that made loans to NY residents at rates that violated the NY usury laws. (Let me emphasize that the issue here is not whether payday loans are good or bad--that's a separate discussion--but simply whether the NY usury laws were violated.)

http://www.creditslips.org/creditslips/2013/09/follow-the-money-payday-l...

Thursday, September 19th, 2013

As the CFPB gears up to regulate arbitration clauses, a timely article by Omri Ben-Shahar has been posted on ssrn. Part of Ben-Shahar’s “Myths of Consumer Law” project (see here, here, and here ), The Myth of Access-to-Justice in Consumer Law  contains some provocative insights, but key blind spots lead the piece to unwarranted conclusions.

The conclusions are that pre-dispute arbitration and class action waiver clauses in consumer contracts benefit weak consumers. To get there, Ben-Shahar first notes that consumers are not a homogeneous group and access to justice in the courts is far from evenly distributed. Because elites are more likely to sue and are likely to collect higher damages (one of the many reasons they are more likely to sue), giving all consumers the right to sue is, in effect, a regressive cross-subsidy from poorer consumers to those elites.  

http://www.creditslips.org/creditslips/2013/07/another-myth-of-consumer-...

Wednesday, September 11th, 2013

The legislation includes the essential elements of housing finance reform: a dominant role for private capital; considerable protection for taxpayers against future bailouts; a secondary government backstop to ensure stability; competition and entry by new firms into housing finance so that no future entity is too big to fail; a clear delineation of the roles of private firms and the government; an empowered regulator to ensure that loan quality remains high for guaranteed mortgages; and support for activities related to affordable housing.

http://economix.blogs.nytimes.com/2013/07/08/progress-on-housing-finance...

Thursday, September 5th, 2013

This core Brandeisian insight (e.g., Other People's Money) has been lost during the course of the 20th century and its turn to technocratic financial regulation. (Add two parts capital and one part co-cos, mix with risk retention requirements and garnish with macroprudential regulation...) Notice that the one piece of the Dodd-Frank Act that changed the politics of financial regulation--the CFPB--is also where the pushback has been the strongest.  We need to stop seeing financial regulation as a matter of technocracy and start seeing it as a matter of political importance of the first order.  At stake is nothing less than the rule of law. 

http://www.creditslips.org/creditslips/2013/08/the-rule-of-law-in-the-financial-system.html

Tuesday, September 3rd, 2013

In any case, it's worth noting what the Michigan constitution does not do:  it provides no protection for non-accured pension benefits.  Current employees might find the terms of their pension plans changed going forward.  It's also not clear to me whether this provision extends to protect accrued retiree health benefits. 

So where we stand is that the Michigan courts have to sort out whether the bankruptcy filing would violate the Michigan constitution. 

http://www.creditslips.org/creditslips/2013/07/whats-happening-in-detroi...

Wednesday, August 28th, 2013

The second issue is why is the list of Fed Chair candidates inevitably just a bunch of economists given that bank regulation is arguably now the more important of the Fed's dual roles? (Actually treble, as the Fed also acts as an important payment system operator.). Why on earth would anyone think economists, no matter how brilliant, would be the go-to group for bank regulators? Economics studies the supply and demand of lots of things, including money, but that's quite different from bank regulation. Bank regulation simply isn't part of the typical economist toolkit. There are some economists who know a lot about bank regulation, but there are also some non-economists who know as much, if not more. (To name a few, Fed governors Dan Tarullo or Sarah Raskin Bloom or former FDIC chair Sheila Bair, all, I believe, lawyers by training, but also with bank reg experience as an academic, a state bank regulator, or a Congressional staffer.)

http://www.creditslips.org/creditslips/2013/08/why-is-the-fed-chairman-a...

Thursday, August 22nd, 2013

Julie Miller of Oregon was awarded $18.4 million in punitive damages and $180,000 in compensatory damages against Equifax, after Miller contacted Equifax eight times between 2009 and 2011 in an effort to correct inaccuracies, including erroneous accounts and collection attempts, a wrong Social Security number, and an incorrect birth date.

The jury found that Miller suffered a damaged reputation, a breach of privacy, and the lost opportunity to seek credit. She has a brother who is disabled and who can't get credit on his own, and she wasn't able to help him. Miller discovered the problem when she was denied credit by a bank in early December 2009. She had found similar mistakes in her reports with other credit bureaus, but the others corrected their errors. Needless to say, Equifax plans to appeal.

http://www.creditslips.org/creditslips/2013/08/woman-wins-186-million-ve...

Wednesday, August 21st, 2013

Abstract

We examine how executives’ behavior outside the workplace, as measured by their ownership of luxury goods (low “frugality”) and prior legal infractions, is related to financial reporting risk. We predict and find that CEOs and CFOs with a legal record are more likely to perpetrate fraud. In contrast, we do not find a relation between executives’ frugality and the propensity to perpetrate fraud. However, as predicted, we find that unfrugal CEOs oversee a relatively loose control environment characterized by relatively high probabilities of other insiders perpetrating fraud and unintentional material reporting errors. Further, cultural changes associated with an increase in fraud risk are more likely during unfrugal (vs. frugal) CEOs’ reign, including the appointment of an unfrugal CFO, an increase in executives’ equity-based incentives to misreport, and a decline in measures of board monitoring intensity.

http://rhdavidson.com/2012/03/31/executives-off-the-job/

Monday, August 19th, 2013

Abstract

By failing to properly transfer ownership of loans and mortgages, recording fraudulent documents, and performing unlawful foreclosures, financial institutions and law firms have generated property titles that range from defective to toxic. Those actions evince a systemic failure to comply with longstanding principles of real property law and regulations governing financial transactions. Title companies participated in title services and issued title insurance policies throughout the housing boom and although they did not directly cause toxic titles, many title insurers have ultimately assumed the risk for the bad practices that became the industry norms in the last decade. In this article, I will discuss how title insurers have exposed themselves to liability for toxic titles.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2288280