Securitization | War on the Home Front

64995Leave a Comment2012-01-21+14%3A29%3A55Adam+Levitin

A new study by Credit Slips own Jean Braucher and Bob Lawless (with Dov Cohen) on race and bankruptcy filings received very prominent and well-deserved page A1 coverage in the New York Times. It's a fabulous study, and it's wonderful to see it getting such great media attention.

Jan

Payday Loans are First Target of New Consumer Protection Chief

By Nathalie Martin | Securitization-MBS

64594Leave a Comment2012-01-19+17%3A04%3A34Nathalie+Martin

Richard Cordray’s first CFPB hearing will be held today and will focus on the practices of payday lenders. Seventeen states and the District of Columbia already outlaw payday loans, but in all of the others, lenders can and do charge 400% interest or more, on loans against consumers' next paycheck. Under terms of the 2010 Dodd-Frank Act, the CFPB could not regulate payday lenders or other nonbank entities that provide financial products until its director was in place. As Republican senators were blocking Cordray's confirmation, President Barack Obama used a recess appointment to install him last month. Cordray's first order of business was to launch the bureau's nonbank supervision program, from which today's hearing springs. Consumer advocates are very hopeful that the CFPB will use its authority to scrutinize industry loan records and marketing materials and gauge their compliance with federal laws. According to Jean Ann Fox of the Consumer Federation of America, consumer groups also hope that the CFPB will develop new rules regarding industry practices deemed unfair, deceptive and abusive.

Carter Doughtery of Bloomberg News just posted a more detailed description of the CFPB's current inquiry into payday lending.

Jan

Kindle and ePub Versions of Bankruptcy Code (Updated)

52114Leave a Comment2012-01-19+16%3A44%3A00Bob+Lawless

One of my crack research assistants, Scott Cromar, put together electronic versions of the U.S. Bankruptcy Code and Federal Rules of Bankruptcy Procedure (FRBP) that can be read using Amazon Kindle or an ePub reader. Because these books were assembled using public-domain materials from the U.S. government, we are making them available free of charge. Keep reading after the page break for links and more information.

We have versions both with and without the historical and revision notes for the Bankruptcy Code. Whether you want the full version will depend on your tolerance for these sometimes-lengthy materials at the end of each Code section. You can download the different versions from these links:

There are a few caveats for use of these files. First, we have produced these files from the U.S. government versions and believe them to be accurate, but we have not proofread the files or compared them to the originals. Use them at your own risk.

Second, these files are provided without technical assistance. You can find lots of web pages explaining how to use individual Kindle or ePub files. For example, here is an example about the Amazon Kindle and here is an example for an ePub file. If you find the files useful and want to show your appreciation, the best thing you can do is thank the dean of the University of Illinois College of Law, Bruce Smith, for making available the resources for these sorts of projects that help support the profession.

UPDATE (1/19/2012): I've bumped this post temporarily back to the top of the blog to note that new files have been uploaded to reflect the amendments to the Federal Rules of Bankruptcy Procedure that took effect on December 11, 2011. The links now take you to the new files.

UPDATE (12/09/11): New files have been uploaded to reflect a Creative Commons license.

Jan

SOPA, PIPA, and Us

64351Leave a CommentSOPA%2C+PIPA%2C+and+Us2012-01-18+17%3A39%3A40Bob+Lawless

Given what a small part of the web we are, it seemed a little melodramatic for Credit Slips to go dark over the proposed Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA). It did seem appropriate at least to add my own voice to the opposition.

If you are not familiar with these heavy-handed attempts to police intellectual property piracy, plenty of information is available from Wikipedia here (and, yes, that link still works today, January 18). Some of the provisions in these acts could have implications for small sites such as this.

Although the government should stop the theft of intellectual property, these proposed laws go way too far, sacrificing too much freedom in the name of property rights. In particular, it disappoints me that some senators who have been champions of consumer protection have put themselves on the wrong side of this issue. Specifically, Senators Patrick Leahy, Sherrod Brown, Dick Durbin, Charles Schumer, Al Franken, and Sheldon Whitehouse are listed on THOMAS as sponsors or co-sponsors of PIPA (S. 968). It would be great to see these senators lead a retreat from these onerous pieces of legislation.

Those are my personal views as blog administrator. And, that is probably a point we don't emphasize enough on this blog -- everyone is speaking for himself or herself only.

Jan

Bankruptcy, Backwards

63888Leave a CommentBankruptcy%2C+Backwards2012-01-16+19%3A42%3A29Adam+Levitin

Credit Slips Own Anna Gelpern has a great new article in the Yale Law Journal that very much deserves a plug. It's called "Bankruptcy, Backwards: The Problem of Quasi-Sovereign Debt." The article deals with the problems of financial distress for quasi-sovereigns, like US states or even to some degree EU member states. As Anna points out, bankruptcy seems to mean all things to all people, and as a result framing discussions of how to deal with quasi-sovereign debt---where there is no bankruptcy regime of any sort--quickly devolves into debates about existing bankruptcy systems, like US Chapter 9, rather than starting from the unique problems of quasi-sovereign debtors and then figuring out what sort of financial restructuring system might make sense.

I highly recommend the article, particularly for those of us who don't regularly deal with sovereign debt issues. There's a strange divide in practice and scholarship between domestic bankruptcy and sovereign debt restructuring. A few people (David Skeel, Steven Schwarcz, Bob Rasmussen, e.g.) have written in both areas, but they remain pretty separate fields. Anna's insights from the sovereign debt field are very useful for domestic bankruptcy scholars, as they help us step back and see the larger picture of what is going on.

Jan

American Capitalism: Profit, But Fairly

63836Leave a Comment2012-01-16+15%3A47%3A34Adam+Levitin

Adam Davidson wrote up an interesting apologia for Wall Street in the NY Times last week, which I think is ultimately a call for better regulation, rather than bank-hating. I missed the piece originally, but Yves Smith found it and has nothing good to say about it. I think Yves is a little too harsh on Davidson. I've got issues with parts of the piece, but on different grounds, namely that it efuses to engage on the real issue. The problem isn't financial intermediation. That's a perfectly fine thing that plays a useful role in society.

Instead, the problem is when financial intermediaries do not treat the intermediating parties (meaning consumer and investors) fairly. The history of US financial services is nothing short of a history of scandals involving financial institutions variously ripping off investors and consumers. I'm not just talking about those scandals we remember, like Milken or Madoff or the recent slew or even the second tier ones like the Salad Oil scam or all of 1920s mortgage bonds. The history of US financial services is largely a history of unregulated innovation resulting in abuse and then follow-up regulatory reform. Lather, rinse, wash, repeat.

Davidson argues that the reason to "hate the banks" is that

Wall Street firms enforce the cold rules of capitalism: hostile takeovers, foreclosures, fee increases, defaults. But those rules clearly do not apply to the largest banks themselves.

Davidson misses the mark here a bit. It's not just that the banks get bailed out, meaning that the rules of market discipline don't apply to them. It's that the banks frequently break the rules when applied to others. It's fine to do foreclosures or hostile takeovers or sell consumers speculative securities. But it's not ok to foreclose without following the law or to profit on insider knowledge on hostile takeovers or or to sell investors "safe" assets when you know they are junk.

The fundamental rule of American capitalism is "profit, but fairly." Whatever one thinks is "fair", I don't think there should be much disagreement that Wall Street too often disregards the second part of this dictum to focus on the first. But take away the "but fairly" and society quickly becomes a Gilded Age baronial kleptocracy, a post-Soviet (or pre-Soviet) Russia. If we want capitalism to work--meaning that there is social stability, pace OWS--market players must play by the rules. This is where the debate needs to be focused: ensuring that our financial intermediaries play by the rules.

Davidson could use a little work on his history. Consider his arguments about the importance of Wall Street for fighting poverty, innovation, funding socially beneficial projects, and for the existence of the middle class. All seem quite debatable to me.

The Poor Would Stay Poor?

Davison argues that Wall Street has helped the poor:

In the U.S., we use credit cards, mortgages, credit scores, securitized loans and other Wall Street innovations to do the miraculous: to persuade some institution with a lot of money to hand it over to someone who doesn’t have that much.

This is just ridiculous. First, the poor still generally do not get credit and when they do, it is of dubious value to them. For the poor, credit may help with today's problem, but it becomes tomorrow's problem, not least because of the terms on which it is offered, which are often based as much on market power, not risk-based pricing. Second, it often isn't Wall Street that's funding the loans--it is investors, with Wall Street taking a commission, meaning no skin-in-the-game. The result is what we saw in the housing bubble--Wall Street fleecing investors by brokering unsustainable loans to homeowners. Finally, Davidson presents no case that any of these innovations help the poor. If you want to look at programs that have been successful at raising living standards and eradicating poverty in the US, you need to look at government programs like the TVA (which for all of its controversy resulted in electricity and employment and a decline in malaria in the Tennessee valley).

Innovation?

We have seen some innovation in consumer finance over the past century, no doubt. As for innovation, how much has really benefitted consumers, as opposed to benefitting Wall Street? No doubt we have much greater convenience in payments due to plastic and ACH. But what else? The payment-option ARM? Yes, an innovation. But a good one? Credit life insurance? Cash-out refinancings? We have Paul Volcker's famous comment that the last major innovation in consumer finance was the ATM. I'd say that's more or less correct. Consider the cutting edge innovations of today--mobile payments, contactless, etc. None of them are game changers.

Beyond that, let's give credit where it's due. Some of the greatest innovation has been by the government, not by Wall Street. Securitization, in its modern form, is a government invention (Ginnie Mae!). Likewise, the 30-year fixed-rate mortgage is a government creation (a genesis from the HOLC to the FHA to the VA). Suburban housing--financed originally by the FHA. Other innovations have been made possible only because of implicit governmental backing (e.g., money market mutual funds, which also benefit from an accounting treatment exception). Par clearing payment systems (meaning when you pay $100, the payee gets $100 credited, not $90), are a function of the Federal Reserve.

No Awesome Things?

Davidson is on his strongest ground when he argues that but for Wall Street, lots of cool projects would never be funded. No Facebook, no Apple, no mobile phones, etc. I can't disagree with him that businesses need funding, and that financial intermediation by Wall Street enables this to happen on a much larger scale than otherwise. But whether it is being done fairly is another question, and that's where my issue lies.

This is not my particular area of academic focus, so others may have better examples, but consider IPOs, which are the intermediation par excellence, of shifting funding from limited private sources to public sources. That's fine, but the intermediaries frequently engage in insider trading on the IPOs. And again, remember that government plays a role in all of this, with support for small businesses, ranging from tax breaks for partnerships and S-corporations to SBA-loan guarantees and industry specific (e.g., solar) loan guarantees.

No Middle Class?

What about the "there would be no middle class" meme? This is a very debatable counterhistory. Consumer credit enabled greater consumption by the middle class, but consumer credit isn't free. It just shifts consumption between time periods. The US had a well-established middle class by the end of the 19th century (and arguably much earlier). It grew substantially in the 20th century, but the GI Bills and post-War employment boom and unionization had as much to do with that as anything.

Still, consumer credit played a role, but that role can't be attributed solely to Wall Street. The original consumer credit wasn't Wall Street. It was companies like Singer Sewing Machines or Sears Roebuck and employer- and community-based credit unions. Banks didn't do consumer finance for quite a while. If you look at the source of mortgage loans historically, the "household sector" was a major provider well into the 1950s, meaning that you would get a mortgage from the rich guy down the street or from your uncle, etc., rather than from a bank. As for other financial services, they can, have been, and are often provided not by the private sector, but by the government. Recall that we had a US Postal Service Bank from 1911-1968, that at one point had 20% of deposits and innovated deposit by mail (the postal bank was the Republican counter-proposal to federal deposit insurance!). Most of the rest of the world still has postal banking systems. (Yes, I'm working on a project about this.) The government supports payment systems via the Fed, and housing finance via deposit insurance, FHA, VA, FHLBs, and Fannie/Freddie.

This is hardly a system of pure private capitalism. And if government is going to be assuming some of the risks, it will, not surprisingly dictate some of the terms on which services are offered, both to manage its risk and to further its policies; government support comes with strings attached.

Bottom line here is that the benefits of increasingly specialized financial intermediation are questionable, and the role of government in financial intermediation and development is often overlooked. Privatized financial intermediation often means privatization of gains and socialization of losses, as we have recently seen. More critically, though, absent vigorous regulation, it easily dissolves into a system of profit über alles, in which rules of fair play (and we can debate just what those should be) are disregarded as inconvenient. For capitalism to work in a democracy, it is necessary that everyone play by the rules of the game.

Jan

Twinkies at Risk

By Nathalie Martin | Securitization-MBS

63353Leave a CommentTwinkies+at+Risk2012-01-14+01%3A00%3A51Nathalie+Martin

At least it’s not Tastykakes, right Philadelphians? But seriously, historians with a sweet tooth should be feeling a little uneasy after Hostess’ chapter 11 last week, precipitated by runaway pension and medical benefits claims and a tough economy. Tough is right. If people are too broke to buy Twinkies, things really have reached an all-time low.Interstate Bakeries, which owns Hostess brands, claims to have over $950 million in pension claims.

Twinkies have an interesting history. According to wikipedia, Twinkies were invented in Schiller Park, Illinois in 1930 by James Alexander Dewar, a baker for the Continental Baking Company. Realizing that several machines used to make cream-filled strawberry shortcake sat idle when strawberries were out of season, Dewar conceived a snack cake filled with banana cream, which he dubbed the Twinkie. He said he came up with the name when he saw a billboard in St. Louis for "Twinkle Toe Shoes". During World War II, bananas were rationed and the company was forced to switch to vanilla cream. This change proved popular, and banana-cream Twinkies were never widely re-introduced.

In 1988, Fruit and Cream Twinkies were introduced with a strawberry filling swirled into the cream. However, the product never caught on and was soon dropped. Vanilla's dominance over banana flavoring would be challenged in 2005, following a month-long promotion of the movie King Kong. Hostess saw its Twinkie sales rise 2 percent during the promotion, and in 2007 permanently restored the banana-cream Twinkie to its snack lineup.

Twinkie sales for the year ended December 25, 2011 were 36 million packages, down almost 2% from the prior year. Hostess claims that more customers are choosing healthier foods, implying that it may need to invent a healthy Twinkie in order to avoid liquidation and attract new investors.

Jan

The Consumer Finance Pantheon?

63262Leave a CommentThe+Consumer+Finance+Pantheon%3F2012-01-13+21%3A23%3A21Adam+Levitin

In putting together a revised syllabus for my consumer finance course this semester, I was struck with how different this nascent field is from established courses like Contracts. No matter what Contracts casebook one uses to teach, there are a bunch of well-established chestnuts that everyone knows: Hadley v. Baxendale, for example, or Williams v. Walker-Thomas Furniture, Raffles v. Wichelhaus, Frigaliment, Lucy Lady Duff Gordon, Hawkins v. McGee, or Jacobs & Young v. Kent (and one could go on and on). It's hard to say the same for Consumer Finance; indeed, I've got very few cases on my syllabus.

I'm curious what Credit Slips readers think are the leading cases in the consumer finance area.

I recognize that this is a tricky question, as what fits into "consumer finance" is an open question, but I have in mind the field broadly defined including state and federal law dealing with credit, payments, insurance, and debt restructuring (other than bankruptcy).

Here's what comes to mind immediately for me:

Williams v. Walker-Thomas (unconscionability)
Marquette Nat'l Bank v. First of Omaha (Nat'l Bank Act preemption)
Watters v. Wachovia (OCC preemption for nat'l bank operating subs)
Smiley v. Citibank (OCC preemption for late fees)
AT&T v. Concepcion (availability of class actions)
Heintz v. Jenkins (FDCPA)
Swarb v. Lenox (confession of judgments)
Lynch v. Household Finance (pre-judgment garnishment)
Fuentes v. Shevin (repos under writ of replevin)

It's a noticeably short list, in my mind, and the 1970s Supreme Court cases at the end have a distinctly dated feel to them both because of the transactions and because of the regulatory changes since. (I've added some other illustrative cases to my syllabus, but they're hardly definitive or game-changing decisions.) It may well be that there are just cases I'm not familiar with. But it also might be a function of how consumer finance law operates--private litigation is typically done via class action and those suits, when they survive initial motions to dismiss, etc., usually result in settlements, rather than reported opinions. Yes, there might have to be a class cert. opinion or an opinion approving the settlement, but they tend not to be riveting on points of law. Similarly, public enforcement usually results in settlements (with no wrongdoing admitted) rather than reported decisions. But I'm eager to hear what cases others think of as the "classics" in this area.

Jan

Your Favorite Business Bankruptcy/Restructuring Lingo: A Word of Thanks

63119Leave a Comment2012-01-13+14%3A21%3A28Melissa+Jacoby

Just a word of gratitude to readers for providing great responses to the prior call for corporate bankruptcy lingo. Thanks to your help, UNC Law's advanced business bankruptcy students are collaboratively examining such terms through a wiki and this will help them make an even smoother transition into the professional world. If any new lingo comes to mind, don't hesitate to pass it along!

Jan

Foreclosure Timelines and Mortgage Delinquency: More Evidence from Bankruptcy

62882Leave a Comment2012-01-12+13%3A07%3A16Melissa+Jacoby

At the end of a lively session yesterday at Duke Law School featuring Professor Stephen Ware of University of Kansas Law School, there was a brief discussion of whether shorter foreclosure timelines and clearer rules would promote more workouts of delinquent mortgages. The aforementioned paper about bankrupt homeowners suggests that the opposite might actually be the case: among homeowners in bankruptcy, longer foreclosure timelines in their home states were associated with a lower probability of foreclosure initiation while shorter timelines were associated with a higher probability of foreclosure initiation.

This finding comes with caveats about the models, the limits of the data, and the timing of data collection (early 2007). Yet, as is stated toward the end (p. 312), "Notwithstanding the limits of our models, these results are consistent with the view that state foreclosure laws that impose greater expense on lenders and servicers - as longer foreclosure timelines do - deter foreclosures and may encourage workouts."

Although everyone in the sample ultimately filed for bankruptcy, those who entered the system caught up on their mortgages could focus on other debt problems for which bankruptcy offers more potent tools. This led the authors to note that "state foreclosure timelines may affect the quality and cost of debt relief achieved if they cannot avoid bankruptcy." (p. 312).

Jan

Foreclosure Timelines and Mortgage Delinquency: More Evidence from Bankruptcy

62881Leave a Comment2012-01-12+13%3A07%3A16Melissa+Jacoby

Jan

American Banker: Chase Has Halted Credit Card Collection Suits

62639Leave a Comment2012-01-11+18%3A24%3A44Bob+Lawless

Yesterday, the American Banker reported that Chase has stopped filing lawsuits to collect consumer debtors. Moreover, they did it quietly and quickly. With concerns over sloppy procedures in debt collection, akin to the robo-signing problems in the mortgage industry, this news was quite interesting.

H/t to our reader who pointed me to the story.

Jan

Justice Calls for Foreclosure Mediation Support

By Alan White | Securitization-MBS

62552Leave a Comment2012-01-11+12%3A53%3A24Alan+White

The Justice Department's project on access to justice has issued a report summarizing current research on state foreclosure mediation programs, calling for more funding and support. The report offers an excellent summary of the best available research on foreclosure mediation programs, including the very successful Philadelphia and Connecticut programs, that have participation rates as high as 60% to 70% of defendants, and whose participants achieve settlements keeping them in their home in as much as half of the cases.

The industry, led by federal bank regulator OCC and housing finance regulator FHFA, is promoting the idea that all foreclosures are hopeless, homeowners are using state law solely for the purpose of delay, and that massive foreclosures are inevitable, that most judicial foreclosures just result in default judgments, so let's get on with it. The empirical evidence from states where adequate resources are applied, and mortgage companies are compelled to evaluate each and every homeowner with an income and a desire to pay, belies this myth.

Justice now joins the Federal Reserve in advocating for fewer, not more, foreclosures.

Jan

What is the Relationship Between Credit Cards and Mortgage Delinquency?

62518Leave a Comment2012-01-11+11%3A00%3A00Melissa+Jacoby

Previously I mentioned this new paper on homeowners in bankruptcy in the American Bankruptcy Law Journal. The central goal of the paper was to investigate what makes homeowners more or less likely to have mortgage troubles as they head into bankruptcy. One of the notable findings is that, across all the models, credit access had a significant effect on keeping mortgages current and avoiding foreclosure initiation (specifics listed pp. 302-304). But why?

The study cannot say for sure, so the discussion section (pp. 308-10) explores several hypotheses. Maybe those with continued access to credit cards had better credit histories and were in a stronger relative financial position. Perhaps credit cards filled in other financial gaps so that a debtor could keep a mortgage current. After all, a quarter of filers who missed mortgage payments specifically reported using credit card cash advances as a method of catching up in the two years prior to filing.

But other studies connect the dots differently. For example, some researchers have examined the circumstances under which homeowners prioritize credit card bills over mortgage payments, increasing the likelihood of delinquency. And, before the financial crisis, some authors raised concerns that homeowners put homes at risk by using cash-out refinancing to pay credit card debt.

Some caveats are in order. The paper fully explains the limits of the data and our analysis, and is looking at 2007 bankruptcy filings, so the world looks different today. But if you have a favored hypothesis for this set of findings, please share!

Jan

BROKE: A New Book on Consumer Debt and Bankruptcy

By Katie Porter | Securitization-MBS

62089Leave a Comment2012-01-09+19%3A12%3A56Katie+Porter

Just in time for New Year's resolutions on 1) reading more, 2) paring back your own debt, and 3) learning more about consumer bankruptcy to help you do your job (if you are a lawyer, judge, or academic, media, etc), the book, Broke: How Debt Bankrupts the Middle Class was released from Stanford University Press.

The book makes extensive use of the 2007 Consumer Bankruptcy Project data, providing statistics, analysis, and commentary on consumer bankruptcy and debt topics. I edited the volume, and chapter contributors are many Credit Slips regulars or guest bloggers--Jacob Hacker, Bob Lawless, Kevin Leicht, Angela Littwin, Deborah Thorne, and Elizabeth Warren--along with other top scholars.

In the next few weeks, the chapter authors will blog here at Credit Slips about the research featured in the book, but to whet your appetite, I've included a table of contents for the book after the break. The book is accessible to lay readers but its scholarly focus provides plenty of data to educate and surprise even bankruptcy experts. Working on the book, I certainly learned a great deal about timely and important topics such as how pro se debtors (those without attorneys) fare in bankruptcy, where families go after they lose their homes to foreclosure, how bankruptcy affects couple's marriages, and the ways that bankrupt households differ in their financial straits from other households of concern such as those with low assets or late payments on debt. Of course I'm biased but I think the book provides the most comprehensive overview of the consumer bankruptcy system since the enactment of the 2005 bankruptcy amendments.

The best part about working on the Broke book was engaging in conversation and debate with this group of top-notch scholars, who bring different perspectives and disciplinary training (economics, housing, law, political science, psychology, and sociology) to the study of consumer debt. I hope you enjoy hearing more about Broke in the coming weeks, and on behalf of all authors, we welcome your comments and feedback.

I would also like to take this occasion to again thank the Obermann Center for Advanced Studies at the University of Iowa for funding a gathering of scholars to work on the book chapters, and to thank the principal investigators of the 2007 Consumer Bankruptcy Project for allowing use of the data in the book (see Appendix of this paper for a full description of the Project and a list of principal investigators).

Jan

Law of the Chicken

62068Leave a CommentLaw+of+the+Chicken2012-01-09+18%3A07%3A42Bob+Lawless

A headline from last Friday's BNA's Bankruptcy Law Reporter, which reports recent cases and other legal developments, caught my eye:

Poultry Farmers Can't Rely on Promissory Estoppel Theory;
Proofs of Claim Denied

That seems like a pretty harsh rule for poultry farmers. I wonder whether it is some sort of corollary to the "widows and orphans rule" -- poultry farmers always lose. Ever since Schechter Poultry was effectively overruled, poultry farmers can't seem to catch a break in the federal courts.

Jan

The Fed on Mortgage Servicing

61766Leave a CommentThe+Fed+on+Mortgage+Servicing2012-01-08+03%3A22%3A13Adam+Levitin

I had the privilege today of hearing Federal Reserve Board Governor Sarah Bloom Raskin deliver the keynote address to the Section on Financial Institutions at the American Association of Law Schools Annual Meeting. Governor Bloom Raskin's topic: mortgage servicing, which is not something the Fed has previously addressed. I strongly commend her speech to you. It's rare to see a bank regulator invoke Shakespeare to great effect, as she does, but it's much more important for some of the other things she says:

This wave of foreclosures is one of the factors hindering a rapid recovery in the economy. Traditionally, the housing sector, buoyed by low interest rates and pent-up demand, has played an important role in propelling economic recoveries. The increase in housing sales and construction often is accompanied by purchases of complementary goods, like furniture and appliances, which magnify the effect of the housing recovery.

However, six years after house prices first began to fall, the pace of the economic recovery remains slow. Nationally, house prices have fallen by nearly one-third since their peak in the first quarter of 2006, and total homeowners' equity in the United States has shrunk by more than one-half--a loss of more than $7 trillion. The drop in house prices has had far-reaching effects on families, neighborhoods, small businesses, and the economy, in part because so many American families--more than 65 percent--own their homes. The fall in house prices has caused families to cut back on their spending and has prevented them from using their home equity to fund education expenses or start small businesses. The decline in house prices has also impeded families from benefiting from the historically low level of interest rates, as perhaps only half of homeowners who could profitably refinance have the equity and creditworthiness needed to qualify for traditional refinancing.

This is a really important set of points. They shouldn't sound new to Credit Slips readers, but it's really important to have a Fed Governor saying them.

This is the Fed saying that foreclosures are having a macroeconomic impact. One point that we haven't previously emphasized, but which is obviously of critical importance to the Fed, is that the foreclosure crisis is impeding the Fed's ability to restart the economy because it interferes with monetary transmission. The Fed's basic tool for heating up the economy is to lower interest rates. Consumers with negative equity or damaged credit can't take advantage of lower rates. So if the Fed wants to do its job using its traditional tools, it has to do something about the housing sector. And no matter how the Fed staff's recent report to Congress reads, the truth is there's no way to dance around the big problem of the $700B in negative equity. (The NY Fed recently made some noise in this direction.) We can nibble around the edges, but we just aren't taking the housing sector or the economic recovery seriously unless we address negative equity in a strong and convincing fashion. That will take tools that are not in the Fed's traditional kit, and the servicing fraud investigation is by far the best leverage for pushing through changes in housing.

[btw, I commend Yves Smith's analysis of the Fed staff's report, as well as her commentary on the NY Fed speech. To summarize, it recites conventional thinking circa 2009--which is major progress for the Fed, sadly--and reads like a report cobbled together by economists who have no connection with the realities of the housing market. (Not that this is a new critique of either economists or the Fed. Say what you will about lawyers, but they tend to pay attention to institutional arrangements and practical issues. But this is a symptom of a larger problem of government policy-making in many areas moving from lawyers to economists.) In particular, blathering on about bulk sales of REO to be turned into rentals shows a real disconnect with the market. There's been only one firm that's been buying REO to turn into rental on any scale, Carrington (yes, that same Carrington that Rich Cordray, then Ohio AG, sued in 2008 and which has been screwing MBS investors to boot), and you'd better believe that they're cherrypicking, not doing bulk buys. There's just no market demand for purchasing hundreds of dispersed single-family detached residences for rental because of the uncertainties or unworkabilities of the economics.]

Governor Bloom Raskin also emphasizes that the foreclosures reviews are only step one. There will also be monetary penalties. Take note of the sentence I underlined below, that the penalties must be large enough to incentivize good behavior (and disincentivize bad behavior).

The enforcement actions against these 14 institutions and the associated corrective action plans are only a start in a comprehensive enforcement response to the foreclosure crisis. Monetary penalties for the deficient practices in mortgage loan servicing and foreclosure processing also must be imposed against the 14 institutions. The Federal Reserve and other federal regulators must impose penalties for deficiencies that resulted in unsafe and unsound practices or violations of federal law, just as state banking commissioners and state attorneys general impose penalties for violations of state law. The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties. One purpose of monetary penalties, when they are appropriately sized, is to incentivize mortgage servicers to incorporate strong programs to comply with laws when they build their business models. This is an operational purpose, but as mentioned earlier, monetary penalties also remind regulated institutions that non-compliance has real consequences; the law is not a scarecrow where the birds of prey can seek refuge and perch to plan their next attack.

If the Fed takes this seriously, then the penalties must (1) include disgorgement of all illegal servicing profits--something the CFPB calculated at around $24 billion, (2) include a penalty on top of that so that non-compliance with the law is not just revenue neutral, but revenue negative. In other words, this is a clear is the benchmark by which the Fed and OCC must be judged. If the penalty is a few hundred million, it's laughable. And even a billion or two isn't in the ballpark. Consider the wrongdoing described by Governor Bloom Raskin:

a wide range of troubling issues, such as claims of missing or forged promissory notes; claims that mortgage servicers have foreclosed on the houses of active-duty U.S. soldiers who are legally eligible to have foreclosures halted; sworn affidavits containing false "facts" that homeowners were in arrears for amounts not yet due; claims of falsifications of documents required to transfer ownership of the mortgage; allegations of false affidavits claiming homeowners owe fees for services never rendered; and claims of false affidavits overstating how much homeowners are behind on their payments.

I was also glad to see Governor Bloom Raskin take note of the need for transparency in the federal review.

It is also worth noting the obvious, which is that Congress enacted some of the laws that are allegedly being violated--they are public laws. Their efficacy must be evaluated and re-evaluated by the public. This means that enforcement of laws must occur in a manner that permits an appropriate public evaluation. There is currently a lively debate about the appropriateness and value of transparency regarding the regulatory remediation required by the enforcement actions entered into with the 14 mortgage servicers. The fact that this public debate is occurring is entirely appropriate, and underscores the importance that Americans place on enforcement in the mortgage servicing context.

The cease and desist orders against the 14 large mortgage servicers are publicly available; they have been fully disclosed. The corrective actions that the mortgage servicers are undertaking pursuant to the enforcement actions in an appropriate format also need to be shared with the public. Not only is the public directly and significantly affected by how the acts of mortgage servicers have contributed to the state of the economy, but cities, neighborhoods, and communities have a direct and significant interest in the role that mortgage servicers play in the value of a homeowner's investment.

To this I would add that it's not enough for us to know what corrective actions are being taken. We also need to know exactly what the "independent" review finds for each servicer. This cannot be done with the secrecy that typically accompanies bank regulation. Sunlight is a necessary disinfectant here.

The Fed has not yet released the engagement letters for the "independent" reviewers of its regulated entities. I am hopeful that they will be more transparent than the OCC's when released--it's inexcusable that the conflicts of interest sections and indemnification sections in the OCC letters were redacted so they can't be evaluated.

Indeed, as I've been thinking more about the independent reviews, I'm particularly troubled: many of the entities doing the reviews are staffed by former bank regulators. The servicing violations aren't something new. They've been going on for some time. But bank regulators never caught them. The bank regulators were asleep at the switch and only got in the game after the banks themselves voluntarily stopped some foreclosures and major scandal broke. So now we have some of the former cops who dropped the ball reviewing the banks on that very issue. Another turn of the revolving door. I'm shocked, shocked.

While I get that "Requiring an independent review of certain banking operations is not a new enforcement tool," I don't understand why the bank regulators don't just do the work themselves and make the banks pay for it. That would make me feel far better about the conflicts.

Let me end on an upbeat note. I was particularly heartened to hear this line:

Too many of the practices in the mortgage servicing industry have been developed and defended solely on the basis of "standard industry practice," but many practices were not only standard, but shoddy. This has proven true, I might add, on the underwriting and secondary-market sides of the business, and we are seeing courts reject many of those practices.

This is phrased rather obliquely, but I took it as a subtle endorsement of Ibanez, Levaya and other lower court rulings. Perhaps I'm overreading, but I don't think so. (Indeed, I think there was a lot in this speech that doesn't meet the eye in terms of references to inside-baseball things.) Which brings me to a final point. Something that is often not transparent to the outside world is that there are a range of opinions on regulatory issues, including mortgage servicing, within federal agencies. Servicing problems are not a new issue to Governor Bloom Raskin. It is something she addressed aggressively as Maryland Commissioner for Financial Institutions, and she gets it. And while Governor Bloom Raskin was technically speaking for herself, that's not how Fed Governors operate; the Fed is really careful about messaging. When Governors give speeches, they are quite careful in what they say, as they are really speaking for the Fed.

The Fed has been far from perfect in terms of bank regulatory policy and consumer protection in the past. But what a difference we have here between the Fed and the OCC. I can't imagine the Comptroller making this speech. Let's hope that Governor Bloom Raskin's voice is one that is heeded more broadly in the federal agencies.

Jan

Greek VoluntaryInvolutary DealNoDealDeal: Convolution Eupdate

By Anna Gelpern | Securitization-MBS

61378Leave a Comment2012-01-06+05%3A48%3A48Anna+Gelpern

Will Greece reach a voluntary deal with its creditors to write down its debt by 50% in the coming weeks? Will it default? ... or will its official patrons blink, pay up, and let the creditors off the hook? I hear at least two uber-expert Euro-watchers have taken opposite sides of the bet on that one. I bet nobody wins.

This Wall Street Journal article is rather optimistic, and somewhat incoherent on the trade-offs. Apparently private creditors are willing to take a lower interest rate in exchange for a change in governing law from Greek to English (and presumably the ability to sue in London/submission to jurisdiction) in the exit instruments--which makes some sense. But the piece then proceeds to equate English law with available collateral, which comes right out of nowhere. Emerging market sovereigns routinely submit to foreign law, but virtually no one puts up collateral. As a result, all can sue, but none can levy. Just ask Argentina's creditors, who just celebrated the tenth anniversary of the sovereign asset chase under New York, English, and all manner of other foreign laws. But if all it takes is a switch to English law, we have a deal. I doubt it is that simple.

The article is also muddled on the now-notorious business of collective action clauses and their implications for Greek Credit Default Swaps. Although the vast majority of Greece's debt contracts are under Greek law and have no amendment provisions, and although Greece could try to amend these by legislative fiat (risking lawsuits at home and in Europe), the dominant scenario appears to meld contract and legislation: pass a law that allows a super majority of creditors to bind the dissenting minority. The effect of such a law would be to retrofit majority amendment clauses across the Greek debt stock. If the majority binds the minority, the deal goes forward. (The treatment of Greek debt in official hands would be crucial here).

Such a move almost certainly triggers a credit event under Greek CDS contracts: the new terms would be "binding on all" creditors, which is the litmus test under ISDA documentation. Until now, avoiding CDS triggers has been the line in the sand for key official and private players in this drama. Hence the obsession with characterizing the deal as "voluntary." But if coersion is now on the table, why mess around with the inadequate 50% and contract-legislation hybrids? (I suspect the answer is Euro politics.)

As an aside, the article suggests that major banks are lobbying against a credit event--does this mean that they are not hedged? ... that they sold CDS? ... to whom?

One split-the-baby scenario might be to pass the law grafting collective action clauses onto Greek bonds, but then to refrain from using the clauses to coerce creditors into the deal. Plenty of debtors who had collective acion clauses in their contracts did not use them for various reasons; however, the fact that the option was available might have helped creditors make up their minds. I think this route would be too cute to be seriously considered, but you never know.

Mitu Gulati and Jeromin Zettelmeyer have the only sensible take I have seen on the voluntary/involuntary dance: creditors will take a deep haircut voluntarily if they think the alternative is worse. The alternative could be a default, or another restructuring soon, and on nastier terms. Most sovereign restructurings until now have taken place in the shadow of default. In Greece, default was formally taken off the table at the outset for political reasons. But no one can eliminate the possibility of another restructuring--whether that one is voluntary or involuntary need not be decided today. All you need to know is that the next deal would be worse than the deal now on offer. Under the circumstances, the proposition seems like a no-brainer. Can it last?

Jan

Bankruptcy Filings Down 11.7% in 2011

61227Leave a CommentBankruptcy+Filings+Down+11.7%25+in+20112012-01-05+17%3A56%3A55Bob+Lawless

The year-end bankruptcy statistics from Epiq Systems have arrived. There were just over 1,379,000 U.S. bankruptcy filings in 2011, a decline of 11.7% from the previous year.

On a monthly basis, December kept with the theme of the past year. The daily bankruptcy filing rate in December 2011 was 4,584, a decline of 12.1% on a year-over-year basis. The past seven months have seen year-over-year declines in the 10-15% rate range. What makes December 2011 different is that December 2010 itself had a year-over-year decline. In words, the declines are building on previous declines.

The question for the moment is whether bankruptcy filings will level off at around their current level or continue to decline. I'm inclined to think we'll see a further decline in 2012, although that assessment is more instinct than analysis. I'll try to post a more formal analysis about projected bankruptcy filings for 2012. Bankruptcy filings may not be a great economic indicator, but their levels are important for the bankruptcy system.

Jan

Adam Levitin | The Restatement of Property and the Road to Mortgagocracy

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

61261Leave a Comment2012-01-05+17%3A25%3A094closureFraud

Mortgage may not be enforced except by a person having the right to enforce the obligation or one acting on behalf of such a person…[including an agent or a trustee for the noteholder.] The trust or agency relationship may arise from the terms of the assignment, from a separate agreement, or from other circumstances. Courts … Read more Related posts:

Jan

Financial Institutions Palooza at the Association of American Law Schools Annual Meeting

By Anna Gelpern | Securitization-MBS

61220Leave a Comment2012-01-05+15%3A49%3A28Anna+Gelpern

The Section on Financial Institutions and Consumer Financial Services will have a record four events at this weekend's Association of American Law Schools Annual Meeting in Washington, DC. The theme is rethinking and reviving the field of financial institutions on the ground and in the academy. We will take stock of reforms so far and consider the impact of the crises in the United States and Europe, but also will take a long-term view of the field from diverse theoretical, policy, and methodological perspectives.

The program begins on Saturday morning with a big-think "revival" panel featuring Jill Fisch, Howell Jackson, Kim Krawiec, Pat McCoy, Katharina Pistor, and Annelise Riles, immediately proceeding to the lunch keynote by Governor Sarah Bloom Raskin, introduced by Arthur Wilmarth. Next comes an offsite policy roundtable moderated by Adam Feibelman, with regulators and policy makers from different agencies. The weekend program features five academic paper presentations on Saturday afternoon and Sunday morning, focusing on the state of financial reform and the way forward. Heidi Schooner will moderate the Call for Papers panel.

Full program details are here. Below are the links to the selected papers, authors, and commentators.

Anat R. Admati, Peter Conti-Brown, & Paul Pfleiderer, Liability Holding Companies (presented by Peter Conti-Brown, comments by Saule Omarova)

Eric Chaffee & Geoffrey C. Rapp, Regulating On-line Peer-to-Peer Lending in the Aftermath of Dodd-Frank (comments by Andrew Verstein)

Stavros Gadinis, From Independence to Politics in Banking Regulation (comments by Shruti Rana)

Wulf A. Kaal & Christoph Henkel, Sequential Contingent Capital Triggers in Europe and the United States (comments by Mehrsa Baradaran)

Anita K. Krug, Institutionalization, Investment Adviser Regulation, and the Hedge Fund Problem (comments by Kristin N. Johnson)

Jan

Understanding Anna Nicole Smith (or, at least, Stern v. Marshall): A Must-Read Analysis

61160Leave a Comment2012-01-05+11%3A44%3A32Melissa+Jacoby

Led by my colleague Elizabeth Gibson, four members of the National Bankruptcy Conference have produced a fantastic analysis of the Stern v. Marshall U.S. Supreme Court decision (that most recently has been mentioned on Credit Slips here and here). I strongly recommend it for judges, lawyers, academics and others interested in the bankruptcy system and/or federal court jurisdictional questions.

Jan

The Restatement of Property and the Road to Mortgagocracy

61148Leave a Comment2012-01-05+06%3A39%3A13Adam+Levitin

I recently did a string of blog posts of the Permanent Editorial Board for the UCC's Report on the enforcement of negotiable mortgage notes. I'm still planning a final installment there, but I came across another document that just floored me in showing how across another American Law Institute product that just floored me in how deeply captured and compromised part of the legal elite is.

The document in quest is section 5.4(c) from the Restatement (2d) of Property. The Restatements are an ALI-only product (unlike the UCC, which is jointly done with NCCUSL), and they are the ALI's signature product. They are meant to "restate" the law, meaning summarize and improve it, sort of the way Yiddish versions of Shakespeare plays were unironically advertised as farbesert un fartaytsht (improved and translated). That is to say the restatements are meant to be positive summaries of the law, but they often have normative spins.

Section 5.4(c) appears to stand for a very simple and uncontroversial principle (pace FNMA v. Eaton), that only the obligee of a mortgage note has the right to foreclose on the note:

A mortgage may be enforced only by, or in behalf of, a person who is entitled to enforce the obligation the mortgage secures.

In other words, a naked mortgage's got nothin' (are you listening AZ Supreme Court?). But then the comments and illustration go off the deep-end. Here's Comment (e):

Mortgage may not be enforced except by a person having the right to enforce the obligation or one acting on behalf of such a person...[including an agent or a trustee for the noteholder.] The trust or agency relationship may arise from the terms of the assignment, from a separate agreement, or from other circumstances. Courts should be vigorous in seeking to find such a relationship, since the result is otherwise likely to be a windfall for the mortgagor and the frustration of [the noteholder]'s expectation of security. See Illustration 10.

Illustration 10 is an example in which a past agency relations is grounds for finding a current agency relationship:

Mortgagee has often served as [noteholder's] agent in the past with authority to foreclose mortgages held by [Noteholder]. A court is warranted in finding on the basis of this pattern of prior conduct that Mortgagee is noteholder's agent for purposes of foreclosing the instant mortgage.

I've never seen anything like this before. The Restatement here is saying that "courts should bend over backwards to make sure that the lender wins no matter how badly the lender has screwed things up." Is it really an accurate restatement of the law to say "lenders win even if they screw up and don't follow the law"? That sure sounds like a Mortgagocracy. I suspect that many ALI members would be pretty shocked to find that's what the Restatement is saying. But it's got the ALI imprimatur on it.

I get that the borrower has no right to a windfall, but I can't see why that means that basic principal of agency law should be disregarded and agency relationships implied where they do not exist; the ALI's Restatement (2d) on Agency (sec. 15) is quite clear in stating that an agency relationship requirement mutual consent. It isn't an implied set of fiduciary duties, etc. Current agency is going to be implied from a past course of dealing? What if the scope of that agency varied in the past? Curiously, the Restatement cites NO cases in support of its point.

Let me be clear. I don't think anyone deserves a free house. But a mortgage is a contract, and a background term to that contract is that the foreclosure has to follow the law. That's part of the deal, no different from any other (non-severable), material term. Otherwise, why not allow self-help foreclosures and evictions?

I don't think it's too much to say that if you're going to engage in a major financial transaction like making a mortgage loan, you'll be expected to follow the law correctly or not enjoy its benefits. Both lenders and borrowers have to play by the rules. If you don't pay the mortgage and the lender follows the law, you lose your house. But following the proper legal procedure is no less important than the default in a foreclosure; both are equally important requirements. It's not a windfall. It's part of the mortgage contract.

What about the noteholder's "reasonable expectation of security"? There is none, and I don't see how the drafters possibly thought there was one. Just having a note without the security instrument doesn't make you meaningfully secured. The noteholder only has a reasonable expectation of security as long as it retains the security instrument or can prove its terms. If it doesn't, what expectation of security could it reasonably have?

Consider if the security instrument were destroyed prior to recordation, but not the note. Perhaps there could be an equitable mortgage or the like, but the noteholder would have a lot of trouble proving that the note was in fact secured. That creates a strong incentive to record, asap. If you don't control the security instrument physically, and it isn't recorded (and recording isn't required usually for enforceability against the borrower), how can you reasonably expect to remain secured? You can't take care of that security instrument if you don't have it and don't have an agent or trustee holding it for you. But apparently the good folks who did the Restatement of Property think that's quite reasonable. Or more precisely, they don't care if it's reasonable, as long as the lender wins.

It's really disturbing to see an ALI product moving so blatantly away from rule of law and towards mortgagocracy. Now the good news is that the Restatement isn't law. But this is a scary sign of how part of the legal elite, which used to fight for rule of law above the rule of monied interests, has been co-opted. More about that whenever I get to my final post on UCC Article 9.

Jan

MBIA v. Countrywide Ruling

60998Leave a CommentMBIA+v.+Countrywide+Ruling2012-01-04+18%3A57%3A12Adam+Levitin

There's been a lot of media coverage of the recent ruling of the NY Supreme Court (that's the trial court, not the final Court of Appeals) in MBIA v. Countrywide, a suit by the monoline bond insurer against Countrywide for fraud, negligent misrepresentation, etc. that induced it to insure Countrywide's mortgage-backed securities. This and Syncora's similar suit are being carefully watched because they are the MBS litigation that is the farthest along and thus seen as a belleweather for other rep and warranty suits. While the monolines are in a somewhat different position than MBS investors, they provide a good indicator of what to expect from investor suits.

For all the discussion of the opinion, no one seems to have actually read the damn thing, so here it is.

To summarize: MBIA is suing for insurance fraud and breach of reps and warranties in the insurance policy it issued at CW's request for some 15 MBS trusts. The main issue in this decision was whether MBIA had to prove that the alleged fraud and breach of warranty resulted in its losses.

CW argued that loss causation was necessary, which presented a real challenge in terms of sorting losses from the fraud vs. losses from market factors. The NY Supreme Court said that loss causation was not required here. MBIA must merely prove that CW made a material misrepresentation, meaning that increased the risk that MBIA assumed. Put differently, but for the misrepresentation MBIA would not have issued the policy on the same terms. The Court ruled for MBIA and says no loss causation is required. There's good policy for this ruling. As late John Marshall (Chicago) Law School Professor John Dwight Ingram explained, requiring a causal connection may encourage fraud because "If [the rule were otherwise and] the cause of loss is not connected [to the misrepresentation], [it means that the insured] has coverage he otherwise couldn't have obtained. Thus, [the insured] had nothing to lose by misrepresenting."

What's puzzling, then is that having said that MBIA doesn't need to prove loss causation, the court states "MBIA must then prove that it was damaged as the direct result of the material misrepresentations. As has been aptly pointed out by Countrywide, this will not be an easy task." (p.15). So no loss causation required, but damages must be shown to be linked to the direct result of the material representations? Is it yes or no?

I'm not sure how to square this. My first thought was that the Court was making a technical distinction between not having to show loss causation to prove materiality of a misrepresentation (which goes to increased risk, not increased loss), and loss causation on the issue of damages. But I really don't see anything in the opinion or order to support such a reading. Instead, the best way I can square these seemingly contradictory statements is that the court is saying that MBIA will have to prove its payouts on the policies, given what the court says is the proper remedy, namely "rescissory damages" (which might be better termed "reliance damages"). I think this means MBIA doesn't have to wade into what damages were from the financial crisis and what from the fraud, but there is still that reference on p. 15 to this not being "an easy task". I really wish the court had been clearer on this point.

The other interesting issue in this case relates to damages. There is a dispute between the parties as to whether the damages should be rescission or rescissory (reliance) damages. It's hard to tell the difference from the opinion: it would appear that the difference between these remedies is whether the insurance policy remains in place going forward. In either scenario, MBIA would receive back its payouts on the policies and have to return (or deduct) premiums already received.

With rescission, the contract would no longer exist, meaning there would be no more insurance on the MBS, and MBIA wouldn't receive any future premiums. That would leave the MBS investors kind of screwed, but with a suit against CW. With rescissory damages it seems (but the court isn't clear on this) that the policy would remain in force, but--and here's the big point, but it's only apparent in MBIA's reply brief--with rescissory damages, the contract will remain in force and CW to repurchase the performing loans that do not conform to representations. In other words, MBIA will continue to get premiums going forward for insuring the good loans. So what MBIA is trying to do is to split the deal in half. For the loans that have gone bad, to have CW cover the payouts minus the premiums and then for the loans that haven't gone bad, MBIA wants to keep doing the original deal as envisioned. That's a very strange remedy. Either the contract is rescinded or it isn't. You can' t usually rescind the contract up until today and then honor it going forward. It's a non-severable package deal. I would have thought that the answer here for a fraud in the inducement type claim would just be plain old rescission and let the MBS holders have at CW on their own. The court doesn't completely resolve this. It denied MBIA's motion for summary judgment on whether it could compel repurchases of perfoming, but non-conforming loans. That doesn't mean that MBIA loses on that issue, just that it didn't win yet. Reading this all together, though, it seems like MBIA is going to get partial rescission and partial selective repurchase of the bad loans.

Final thought: I'm kind of surprised that the MBS holders haven't intervened or been interpleaded given their interests in all of this.

So to recap, I think this is a win for MBIA, quite possibly a very big win, but it's really hard to tell just given the lack of clarity in the opinion. If you think they'll help decipher things, here is MBIA's original brief, the CW opposition brief, and the MBIA reply brief.

Jan

In or Out of Mortgage Trouble? A Study of Bankrupt Homeowners

60974Leave a Comment2012-01-04+17%3A47%3A48Melissa+Jacoby

This is a newly published paper in the American Bankruptcy Law Journal that I was lucky to work on with Daniel McCue and Eric Belsky at the Joint Center for Housing Studies at Harvard University. Using previously unexamined data in the 2007 Consumer Bankruptcy Project, we study what makes homeowners more or less likely to have mortgage troubles as they head into bankruptcy. Although much can be said about the econometric analysis, for now I wanted to mention quickly that the paper includes descriptive details about bankrupt homeowners (debtor-reported) such as numbers of missed mortgage payments, use of adjustable rate mortgages, mortgage broker use, mobile homes, and refinancing or home equity lines of credit. So please check it out!

Jan

In or Out of Mortgage Trouble? A Study of Bankrupt Homeowners

60975Leave a Comment2012-01-04+17%3A47%3A48Melissa+Jacoby

Jan

In or Out of Mortgage Trouble? A Study of Bankrupt Homeowners

60973Leave a Comment2012-01-04+17%3A47%3A48Melissa+Jacoby

Jan

The CFPB Gets a Director