Dirt Lawyers and Dirty REMICs

Probate Property, 2013

Yale Journal on Regulation, 2020

A “portfolio” here is a bundled set of contracts. In this Article, we address a commercially important example, where a local bank finances home purchases. The bank bundles the resultant contracts—the mortgage-backed securities (MBS)—into a portfolio, which it then sells to a firm, denoted an “originator.” The originator buys portfolios from several local banks and sells the portfolios to a large bank, which markets the portfolios to publicinvestment vehicles, such as trusts. “Portfolio contracts” govern each of these sales. We show that the initial portfolio contract between the local bank and originator is unenforceable for two reasons. First, in contrast to goods sellers, who warrant that the goods perform, the local bank warranted that it created each of the constituent MBS in the portfolio according to good underwriting practice. Hence, while breach is observable to the goods buyer (who can see that the goods did not perform), the portfolio buyer cannot observe breach because e...

2009

SSRN Electronic Journal, 2008

OMPLEX ECONOMIC TRANSACTIONS, especially those engaging multiple jurisdictions, are creating considerable problems in regulation and management that are taxing states' resources. The result is that alternative support structures are generated to resolve these difficulties and lacunae (Gessner, 2008a, this volume). While states provide some legislative frameworks, the vast majority of the support structures are brought into existence by other sources. Among them are candidates such as lex mercatoria (Konradi, 2008, this volume), real-time contract evaluation (Dietz and Nieswandt, 2008, this volume) and large and medium-sized law firms (Flood and Sosa, 2008). The liquidity crisis originally prompted by the 2007 sub-prime mortgage debacle in the United States is an exemplar of the type of complexity referred to here that has caused chaos in international financial markets. Here, although the individual steps in the creation of the sub-prime market and its extension and amplification through the collateralised debt obligation market were carried out legitimately, the cumulative effect of the steps combined with the lack of necessary regulatory oversight by the authorities produced a series of effects that rippled out worldwide and that most states were unable to manage competently or foresee, or even begin to calculate how to prevent their future re-occurrence. 1 Indeed, the regulatory conundrum was such that whichever way governments acted, they would be accused of participating in the creation of moral hazards by rescuing institutions or failing to insure weak, unprotected investors from the seamy side of market exploitation. 1 By the first quarter of 2008, the 'credit crunch' had caused one major British mortgage bank to threaten bankruptcy and ultimately be nationalised by the government, and at least two German banks to be rescued by state authorities to avoid insolvency. In both cases, their exposure to sub-prime mortgage hazards through their dealings in asset-backed paper was the genesis of their problems.

Oregon law review, 1979

The author wishes to thank Professor Andrew L. Kaufman of the Harvard Law School for his comments on an earlier draft of this Article. 1 "'Bank' means any person engaged in the business of banking." U.C.C. §1-201 (4). All references herein to the Uniform Commercial Code are to both the 1962 and 1972 official texts. 2 " 'Issue' means the first delivery of an instrument to a holder or a remitter." U.C.C. § 3-102(1) (a). 3 "Any writing to be a negotiable instrument. .. must (a) be signed by the maker or drawer; and (b) contain an unconditional promise or order to pay a sum certain in money ... ; and (c) be payable on demand or at a definite time; and (d) be payable to order or to bearer." U.C.C. § 3-104(1) (a)-(d). 4 A writing which complies with the requirements of U.C.C. § 3-104 (1) is "a 'draft' ('bill of exchange') if it is an order." U.C.C. § 3-104(2) (a). An "order" is a direction to pay that identifies the person to pay with reasonable certainty. U.C.C. § 3-102(1)(b). 5 The classification, though adopted by the courts, is not backed by the provisions of article 3 of the Uniform Commercial Code. Indeed, the Code neither uses the expression nor treats separately the subject of "banker's instruments."

Edinburgh Law Review, 2015

bepress Legal Series, 2004

This Article examines the trend in commercial finance law to reduce or eliminate the obligation to give notice of nonpossessory interests in personal property in systems such as those created by Article 9 of the Uniform Commercial Code. Although the purpose and merits of such systems have long been debated, they have generally been viewed as effective solutions to the problem of secret liens-interests in property that were neither recorded nor otherwise readily observable. Two recent sets of legislative developments suggest that we may care much less about the problem of secret liens than we are willing to acknowledge. First, recent revisions to Article 9 of the UCC, which governs many commercial finance transactions, tolerate secret liens that may arise on such increasingly important assets such as data, intellectual property, bank accounts, and securities. Second, states have recently begun to enact non-uniform legislation designed to promote asset securitizations. This legislation often gives fully preemptive effect to the parties' contracts, which would, incidentally, appear to displace rules on notice filing that might otherwise apply. It effectively ends the obligation to give notice. This Article offers three arguments against this trend. First, tolerance of secret liens challenges recent developments in our understanding of the relationship between property rights and information costs. Second, notice filing systems will act as proxy for the information that might otherwise be generated within tightly knit merchant communities. Third, these systems may have important behavioral consequences both for those required to provide the notice and for the audience for the information thus provided. This Article therefore counsels caution in enacting legislation that would diminish or dilute notice filing in commercial finance transactions.

The Dalhousie Law Journal, 1976

2012

Italian civil law notary, has contributed greatly to this article by her generous sharing with the authors about the function of civil law notaries, the differences between the civil law and common law approaches to transactional law, practice and professionalism. Best of all, she has shared her colleagues in Consiglio Naxionale del Notariato with the author and enabled a better understanding of comparative real estate law for all of us. The authors wish to thank especially Ruth Siegel (LL.M.) for her research help with an earlier version of this article, particularly with Part II; Sheraz Darr (JD '12) and Gerre Anne Harte (JD '11) for her research and editing assistance especially important for the two authors working in two places and sometimes in two languages. We appreciate colleagues who reviewed the draft including Jason Kilborn and Debra Pogrund Stark. No part of this article suggests that they agree with the content or the views expressed. This project benefitted from the Summer Research Stipend Program at The John Marshall Law School; the authors are grateful to Dean John Corkery and Associate Dean Ralph Ruebner for their encouragement.