December 17, 2024
Federal Home Loan Banks’ Liquidity Role During Financial Crises
The historic Federal Home Loan Bank Board Building CC BY-SA 4.0
The U.S. Government Accountability Office (GAO) has invited me to participate in a review of the Federal Home Loan Banks’ Liquidity Role During Financial Crises. I have previously written about the FHLBs here. The invite reads in part,
GAO is an independent, nonpartisan federal agency that supports Congress by evaluating federal programs and activities. In response to a request from the House Committee on Financial Services, our team is conducting a review of the Federal Home Loan Banks’ (FHLBank) liquidity role during financial crises.
As part of our work, we plan to provide Congress and the public more information on the strengths, limitations, and feasibility of certain changes that academics, interest groups, and others have suggested to address perceived issues with FHLBank lending during crises. We identified the changes through a review of academic, trade, and grey (dissertations, blog posts, etc.) literature since 2007. We then narrowed the list down to a shorter list of changes for further discussion. While we recognize there is currently substantial discussion around the FHLBanks’ housing mission and membership, we are focusing on FHLBanks’ lending to banks. Please note that the changes to be discussed are not GAO recommendations.
The GAO is seeking input “from individuals, organizations, federal agencies, and FHLBanks on the list of changes to address concerns with FHLBank lending during crises.” I had previously written that while the FHLBank System
was originally designed to support homeownership, it has morphed into a provider of liquidity for large financial institutions.
Banks like JPMorgan Chase & Co., Bank of America Corp., Citibank NA and Wells Fargo & Co. are among its biggest beneficiaries and homeownership is only incidentally supported by their involvement with it.
As part of the comprehensive review of the system, we should give thought to at least changing the name of the system so that it cannot trade on its history as a supporter of affordable homeownership. But we should go even farther and give some thought to spinning off its functions into other parts of the federal financial infrastructure as its functions are redundant with theirs.
This GAO review is a good start to subjecting the System to such a comprehensive review!
December 17, 2024 | Permalink | No Comments
October 28, 2024
Social Housing, Federal Style
U.S. Senator Tina Smith (D-MN) and Representative Ocasio-Cortez (D-NY) recently introduced the Homes Act which would establish a Housing Development Authority. The HDA is based on the Social Housing Development Authority bill introduced in New York earlier this year.
I was on a panel that discussed the pros and cons of the New York bill. The recording of the panel can be found here.
More specifically the federal bill would
- Establish a national Housing Development Authority to acquire and develop real estate to create and maintain a stock of permanent, sustainable, affordable housing, including single- and multi-family housing, with robust tenant protections.
- Empower local communities to address their specific housing needs by financing real estate acquisition or conveying property to public housing authorities, mission-driven nonprofits, tenant- or resident-owned cooperatives, state or local governments, and community land trusts.
- Require the housing development authority to maintain portfolio-wide affordability by setting aside 40% of units for extremely-low income households and 30% of units for low-income households.
- Cap rents for units financed under the Act at 25% of a household’s adjusted gross income and cannot increase more than 3% per year.
- Support homeownership by allowing residents to purchase homes under shared equity models and providing relief to mortgage borrowers at risk of foreclosure due to market instability or economic distress.
- Provide workers with strong labor protections building this new housing.
- Provide tenants with opportunities to come together to purchase their buildings prior to large, for-profit developers buying them.
- Provide funding to rehabilitate and address the backlog of necessary improvements for public housing and repeal the Faircloth Amendment to allow new public housing.
- Authorize $30 billion in annual appropriations, combined with a revolving loan fund to recoup and reinvest funds back into housing. Annual appropriations include a 5% minimum set aside for Tribal communities and a 10% minimum set aside for rural communities.
(This is from AOC’s press release, linked to above.)
October 28, 2024 | Permalink | No Comments
October 23, 2024
Foreclosure Rescue Scam Shut Down
I recently served as an expert witness in a forfeiture proceeding that stemmed from an expansive criminal scheme to defraud vulnerable New York City residents out of their homes. I was a pro bono expert on behalf of one of the homeowners. Judge Ramos (SDNY) ruled in favor of the homeowner, relying in part on my testimony regarding due diligence norms in real estate transactions. United States v. Meiri, 15 Cr. 627 (ER), 2024 WL 451230 (S.D.N.Y. Oct. 17, 2024), The opinion can be found here.
The Opinion & Order opens,
This forfeiture proceeding stems from an expansive criminal scheme to defraud vulnerable New York City residents out of their homes or other properties. From around January 2013 to May 2015, Herzel and Amir Meiri, along with five other defendants, operated an organization known as “Homeowner Assistance Services of New York” (HASNY). The defendants targeted owners of distressed properties, inviting them to seek HASNY’s assistance to save their homes from foreclosure. Under the pretense of a loan modification or a short sale, the defendants then tricked the victims into transferring their properties to one of the defendants’ entities. The defendants generated millions of dollars in profits through this fraudulent enterprise.
The scheme eventually came undone, and criminal proceedings were initiated. The Meiris pled guilty to conspiracy to commit wire fraud and bank fraud, and they agreed to forfeit more than thirty properties to the United States. Two of those properties, both located in Brooklyn, are at issue here. the first is 2146 and 2148 Fulton Street, which the defendants stole from Mary and Samuel Nyamekye. The second is 644 Chauncey Street, which the defendants stole from Olive and Vincent Holmes.
After stealing those properties, the Meiris used them as collateral to secure loans from Petermark II LLC and Advill Capital LLC. Petermark and Advill have filed third-party petitions asserting an interest in the forfeited properties. The companies maintain that they made the loans without actual or constructive knowledge of the Meiris’ fraud. The United States, however, contends that Petermark and Advill were on notice of the fraud due to numerous red flags. Mr. Nyamekye and Mr. Holmes have filed third-party petitions as well.
October 23, 2024 | Permalink | No Comments
October 7, 2024
Cornell Law School is Hiring a Transactional Clinician
Cornell Law School is hiring! We are looking for a clinical professor of entrepreneurship law who will work with our Entrepreneurship Law Clinic and our newly formed Blassberg-Rice Center for Entrepreneurship Law. Our students work with clients with a diverse range of entrepreneurial efforts, and in the process gain valuable skills for their legal careers. If you are interested in helping to train the next generation of entrepreneurs and the lawyers who will serve them, please consider applying. Or if you know of other suitable candidates, please let them know of this great opportunity in Ithaca. The job positing is here.
October 7, 2024 | Permalink | No Comments
September 18, 2024
The History of Housing Finance
I was happy to present on the History of Housing Finance as part of the Structured Finance Association’s SF Academy series, hosted by Elen Callahan, the SFA’s Head of Research & Education. You need to sign up to access the SF Academy content (although I have covered similar content in many other venues) for those who do not want to bother). The SFA website states that the
September 18, 2024 | Permalink | No Comments
September 17, 2024
Structured Finance Journal Launch
I am excited to be part of the launch of the Structured Finance Journal (SFJ), a double-blind, peer-reviewed publication dedicated to advancing the practices within the structured fixed-income markets. The press release continues,
SFJ is more than just a platform for publishing research—it is a collaborative effort led by an esteemed editorial board and guided by a distinguished advisory council, ensuring the highest quality and relevance of the work we publish.
In tribute to the highly respected but now defunct Journal of Structured Finance, formerly edited by Mark Adelson, we believe in the power of original research to drive practical applications and foster innovation in the field. SFJ is designed for professionals who are dedicated to contributing valuable insights that will help shape the industry’s future.
We invite submissions from industry experts and academics alike. If you have research that offers fresh insights and practical implications, we want to hear from you. Manuscripts should be between 2,500 and 3,500 words, excluding abstracts and references, and must be original work that has not been previously published or is under consideration elsewhere.
In line with our commitment to integrity and transparency, any use of AI tools in your manuscript should be limited to mechanical tasks like editing or citation management, with full disclosure required. Our strict guidelines ensure that only high-quality, relevant, and ethically produced research is featured in the journal.
Submissions must adhere to the Chicago Manual of Style (CMS) for formatting, with specific requirements for typography and content organization. We encourage authors to carefully structure their work, starting with a clear and concise title and abstract, followed by a compelling introduction, organized headings, and a well-rounded conclusion. Exhibits should be properly sourced, and permissions obtained for any previously published material. Details may be found on our online submissions platform.
Join us in advancing the structured finance industry by sharing your expertise and research. Submit your manuscript today and contribute to the growing body of knowledge that SFJ proudly supports. Please contact Elen Callahan at elen.callahan@structuredfinance.org with your questions and interest.
I am excited to join Elen Callahan and the other members of the Editorial Board in this venture:
Mark Adelson, Independent Consultant Content Director, Portfolio Management Research
William Black, Founder and Principal, Black Analytics
Nicole Byrns, Founder and Principal, Dumar Capital
Chun Lin, Managing Director and Head of U.S. Residential Mortgage Modeling, Bank of America
Debra Lofano, Partner, Alston & Bird LLP
Phillip Millman, Advisor, Federal Housing Finance Agency
Tim O’Neil, Managing Director and Head of Canadian Structured Finance, Morningstar DBRS
David Reiss, Clinical Professor of Law & Research Director of the Blassberg-Rice Center for Entrepreneurship Law, Cornell Law School & Cornell Tech
Jeff Schwartz, CFA, Securitized Products Investor
September 17, 2024 | Permalink | No Comments
September 9, 2024
Cornell Law Set to Launch First NYC-Based Law Clinic
Hannah Rosenberg/Sun File Photo
The Cornell Daily Sun just ran an article about the expansion of Cornell Law School’s Entrepreneurship Law Clinic to the Cornell Tech campus in NYC, where I am now located:
Cornell Law School is set to launch its first law clinic in the Big Apple.
Beginning in January 2025, the Entrepreneurship Law Clinic will expand from Ithaca to the Cornell Tech campus on Roosevelt Island.
Through the Entrepreneurship Law Clinic, law students provide pro-bono legal services to emerging businesses, entrepreneurs and startups in the Ithaca area and under the guidance of law school faculty.
Students assist with business formation, hiring and employment, intellectual property management, commercial contracts and public service initiatives, such as aiding small businesses during COVID-19.
All of the law school’s other clinics are located in Ithaca, where the law school is based.
Established in 2018, the Entrepreneurship Law Clinic stands as the law school’s only transactional clinic, which means students gain hands-on legal experience in business.
The law school received a donation from Franci Blassberg ’75 J.D. ’77 and Joseph Rice III in 2023, which helped establish the Blassberg-Rice Center for Entrepreneurship Law. The center will use the funding to expand the Entrepreneurship Law Clinic to New York City.
Prof. Celia Bigoness, law, is the founding director of the Blassberg-Rice Center and the Entrepreneurship Law Clinic. Bigoness emphasized the benefits of the new location.
“Law clinics serve two principal purposes, and our expansion to NYC serves both purposes … — providing pro-bono legal services and hands-on clinical training experience for students,” Bigoness stated to The Sun.
“The clinic has been hugely successful — so successful that its capacity isn’t nearly enough to satisfy student demand,” Cornell Law Dean Jens David Ohlin wrote to The Sun. “This expansion will allow us to scale the program while keeping the intensive, hands-on approach that makes it so effective.”
Law students may join the clinic in their second or third years and often stay for the remainder of their degrees.
Kathleen Joo J.D. ’23, participated in the Entrepreneurship Law Clinic in her second and third years of law school and is now an associate at Simpson Thacher & Bartlett LLP. She believes that the expansion will advance the clinic.
“While I was a student there, … [the clinic] was the closest experience we could get to full-time work,” Joo said. “I imagine the expansion also means that students will get access to a greater variety of clients and projects.”
With this development, students will also be able to spend a semester at Cornell Tech with the J.D. Program in Information and Technology Law.
The law school also hired its second full-time clinical instructor to facilitate the expansion.
Prof. David Reiss joined the law school in July and is the research director of the Blassberg-Rice Center for Entrepreneurship Law. He will teach at the clinic’s New York City location and Bigoness will continue teaching at its Ithaca location.
Reiss previously taught at Brooklyn Law School where he founded its Community Development Clinic. He explained that he is enthusiastic to apply his experiences to the clinic.
“I have represented entrepreneurs and social entrepreneurs over the course of my legal career, first in practice and then as a director of a law clinic, and can’t wait to get started at the [Cornell] Tech campus,” Reiss said.
September 9, 2024 | Permalink | No Comments
