As part of the Legislation Law Prof Blog effort to spotlight relevant new scholarship, today we are featuring an article submitted by Professor Christopher Odinet concerning legislative and regulatory issues related to the mortgage foreclosure crisis. An abstract and link to his article follows. (If you have a compelling piece of scholarship of interest to our readers, please contact one of the blog editors for consideration.)
Abstract
During the housing crisis banks were confronted with a previously unknown number mortgage foreclosures, and even as the height of the crisis has passed lenders are still dealing with a tremendous backlog. Overtime lenders have increasingly engaged third party contractors to assist them in managing these assets. These property management companies — with supposed expertise in the management and preservation of real estate — have taken charge of a large swathe of distressed properties in order to ensure that, during the post-default and pre-foreclosure phases, the property is being adequately preserved and maintained. But in mid-2013 a flurry of articles began cropping up in newspapers and media outlets across the country recounting stories of people who had fallen behind on their mortgage payments returning home one day to find that all of their belongings had been taken and their homes heavily damaged. These homeowners soon discovered that it was not a random thief that was the culprit, but rather property management contractors hired by the homeowners' mortgage servicer.
The issues arising from these practices have become so pervasive that lawsuits have been filed in over 30 states, and legal aid organizations in California, Florida, Michigan, Nevada, and New York report that complaints against lender-engaged property managements firms number among their top grievances. This Article analyzes lender-engaged property management firms and these break-in foreclosure activities. In doing so, the paper points out the legislative and regulatory failures related to the regulation of third party contractors by lenders, particularly in the Dodd-Frank Act, and the need to strengthen state-level unfair trade practice legislation to account for these abuses.
Link to article: here