2012

The election’s over and elections matter we’re told, albeit most of the denizens of Washington seem to have remained in their seats. The fiscal cliff awaits. We wait, with various levels of trepidation, for a workable compromise or, perhaps, to find out that life goes on regardless of what our elected leaders do. A bit of leadership, perhaps? One hopes that the Congress and the Senate, so mad at each other and so dug in on many issues, will, in the New Year, strive to find areas where compromise and commonality can be found. Indeed, whether the noise about principles and non-negotiable positions has content or is merely the expelling of political gasses, it’s pretty clear both parties better find some place to start agreeing and actually do something for the country if they really want to continue to be honored with the right to engage in public service; e.g., keep their rumps in their elected seats.Continue Reading A Christmas Wish: Fix Dodd-Frank (Just a Little)

As Philadelphians, it’s easy to think that 2012 has been a disappointment.  Our beloved Eagles are 4-9, the Phillies had the most disappointing season in recent history and the Sixers traded last year’s best player for someone who has not yet set foot on the court this season (to avoid any rage from hockey fans, we will omit any discussion of the state of the Flyers).Continue Reading Optimism Abounds at the CREFC After-Work Seminar: “Lender Perspective: Current State of the Debt Markets & Trends for 2013”

One of this year’s most discussed investment ideas is the conversion of distressed or foreclosed single family homes into rental properties on a mass scale.  With the FHFA’s Real Estate Owned Initiative offering product in bulk sales and major institutions stepping up to develop programs to finance the acquisition of the pools, REO-to-Rental strategies are …

It’s been a while since we’ve visited Europe in this column, but events, or non-events, cry out for a fly-by. I am reminded of those months of September 1939 to April 1940 when the conflagration that was to be WWII was looming over the western world, yet, on the western front, no shots were fired. Last we wrote, we wondered how long the European community could avoid acknowledging the ultimate denouncement that its economic model of the past half century had failed and simply had to change radically. With sovereign debt continuing to grow and default threatened in Greece and, perhaps, elsewhere, a broad recession, many states with breathtaking levels of unemployment, broken banks, and growing civil unrest, where was the path to normalcy? How could that path not ultimately lead through the breakup of the common currency “as we know it” and to the restoration of national control over monetary policy? But over the past several months, a grand illusion of normalcy has been diligently constructed and nurtured across Europe. If things have not gone terribly well, please, don’t stare. And whatever you do, just don’t tell the European politicians.Continue Reading The Phony War

This is about bad law in the bankruptcy courts, but let us instructively begin with Charlie Brown. Bear with me. Everyone knows the classic Peanuts comic strip, which features the running joke of Lucy and Charlie Brown playing football – Charlie Brown goes to kick the football, only to have Lucy pull it away at the last second, leaving Lucy laughing and Charlie Brown on his back. Every time, Lucy promises Charlie Brown that this time she will let him kick the ball. Charlie Brown, blithely ignoring the obvious, goes to kick the football. Lucy, of course, pulls the ball away again, every time.Continue Reading Fool Me Once…: When Lenders are the Losers in Bankruptcy Court

Last Thursday, the U.S. Commodity Futures Trading Commission (“CFTC”) responded to ASF’s and SIFMA’s requests for relief from the new CFTC rules which implemented certain Dodd-Frank amendments that brought swaps within the purview of the CFTC.  The new rules, which took effect on October 12, 2012, threatened to regulate many securitization vehicles as commodity pools even though these vehicles typically only use swaps for hedging or risk management purposes.  The crux of the issue, and possibly the unintended consequence of the new CFTC rules, is that, without relief, sponsors and advisors (such as depositors, trustees, collateral managers and servicers) would be subject to CFTC registration and regulation as commodity pool operators and/or commodity trading advisors. Continue Reading Unintended Consequences Avoided? CFTC Provides Relief for Certain Securitization Vehicles

Last month, Federal District Court Judge Milton I. Shadur (a long-time Federal Judge and something of a legal legend in Illinois) held a guarantor liable for a deficiency claim brought in connection with a Georgia foreclosure – notwithstanding the fact that the deficiency could not be pursued under Georgia law. The case – Inland Mortgage Capital Corporation v. Chivas Retail Partners, LLC, et. al., Case No. 1:11-CV-06482 (N.D. Ill. 2012) – arose in connection with a defaulted construction loan relating to a retail shopping center outside of Atlanta and is the latest in a series of decisions shaping the legal landscape for guarantors of real estate loans.Continue Reading Caught up in a Waive: Federal Judge Holds Guarantor Liable for Disputed Deficiency

Federal fair lending laws prohibit discrimination in credit transactions. The Equal Credit Opportunity Act (“ECOA”) and the Fair Housing Act prohibit discrimination in mortgage lending on the basis of certain factors including race or color, religion, national origin, sex, marital status, age, handicap or an applicant’s receipt of public assistance funds.

The spotlight in this blog post is on the tension between the potential requirements of fair lending laws and the regulatory pressure to originate relatively standardized mortgage products under relatively stringent underwriting guidelines. To the extent that tighter lending policies and a menu of plain vanilla mortgage products restrict access to credit in a way that disproportionately affects a protected class of borrowers, an increase in the number of disparate impact challenges by regulators and the Department of Justice (the “DOJ”) may result — regardless of intent to discriminate and regardless of whether lending policies appear neutral on their face. Disparate impact theory may also be a basis for liability under the Fair Housing Act and the ECOA.Continue Reading Damned if You Do, Damned if You Don’t: Origination of “Qualified” Residential Mortgages May Trigger Disparate Impact Fair Lending Claims