Northeastern University LAW JOURNAL Vol. 2, No. 1 Spring 2010

Editors’ Introduction

The financial crisis that began in August 2007 has been the most severe of the post-World War II era and, very possibly – once one takes into account the global scope of the crisis, its broad effects on a range of markets and institutions, and the number of systemically critical financial institutions that failed or came close to failure – the worst in modern history. Although forceful responses by policymakers around the world avoided an utter collapse of the global financial system in the fall of 2008, the crisis was nevertheless sufficiently intense to spark a deep global recession from which we are only now beginning to recover.

Ben S. Bernanke
Address to the Annual Meeting of the American Economic
Association
January 3, 2010

The Northeastern University Law Journal is devoted to intellectual rigor and to enriching legal discourse. The Journal is unique, however, in that each issue is dedicated to a single topic and features articles regarding representation, advocacy, and legal strategy, as well as legal theory and analysis. Written by both academics and practicing attorneys, our articles meld legal theory with legal practice while addressing societal challenges and discussing progressive issues in the law. Northeastern University School of Law is often referred to as the nation’s premier public interest law school and the Journal shares the school’s focus on social justice, public service, and the practice of law in the public interest.

This year we present a volume of the Journal focused on advocacy amidst the fallout of the subprime mortgage foreclosure crisis. When we selected this topic in late 2008, the United States was in one the deepest financial crises in its history. The mortgage foreclosure rate had increased more than eighty percent in one year, causing almost one million families to lose their homes.1 The fallout was not isolated to the United States residential mortgage lending market. What followed was the collapse of the global financial market that affected not only the residents on Main Street, but also crushed large established investment banks on Wall Street.

The price gains in the United States housing market that eventually led to the subprime mortgage foreclosure crisis began over a decade ago. After years of slow growth, United States house prices rose more rapidly in the late 1990s.2 The most accelerated price gains were in the mid 2000s, when the annual rate of house price appreciation was between fifteen and seventeen percent.3 As the price of housing increased, a greater percentage of mortgage applications involved adjustable-rate mortgage products.4 The widespread issuance of variable-rate mortgages coupled with the belief by many borrowers and lenders that the price of real estate could only go up led to the demise of the housing market. The availability of these alternative mortgage products and the mistaken beliefs that the real estate markets would continue to soar is likely a key explanation of the housing bubble explosion that led to the current fallout.5 In addition to the alternative mortgage products, some believe that the deterioration in mortgage underwriting standards, which was exacerbated by practices such as the use of zero-money-down and no-documentation loans, led to the fallout.6 What remains of the United States housing market in the aftermath of the fallout is a very different landscape than what it has been over the past decade.

As the economy begins to stabilize, lawyers and the court system must take leading roles to ensure that the mistakes of the past decade are not repeated. As a journal of legal practice, the Northeastern University Law Journal provided a forum for attorneys who are charting their course in the aftermath of the subprime mortgage foreclosure crisis to discuss the challenges they face.

We were honored to host a symposium in the spring of 2009 at which legal practitioners from across the nation came together to share ideasresidential mortgage lending market. What followed was the collapse of the global financial market that affected not only the residents on Main Street, but also crushed large established investment banks on Wall Street.

The price gains in the United States housing market that eventually led to the subprime mortgage foreclosure crisis began over a decade ago. After years of slow growth, United States house prices rose more rapidly in the late 1990s.2 The most accelerated price gains were in the mid 2000s, when the annual rate of house price appreciation was between fifteen and seventeen percent.3 As the price of housing increased, a greater percentage of mortgage applications involved adjustable-rate mortgage products.4 The widespread issuance of variable-rate mortgages coupled with the belief by many borrowers and lenders that the price of real estate could only go up led to the demise of the housing market. The availability of these alternative mortgage products and the mistaken beliefs that the real estate markets would continue to soar is likely a key explanation of the housing bubble explosion that led to the current fallout.5 In addition to the alternative mortgage products, some believe that the deterioration in mortgage underwriting standards, which was exacerbated by practices such as the use of zero-money-down and no-documentation loans, led to the fallout.6 What remains of the United States housing market in the aftermath of the fallout is a very different landscape than what it has been over the past decade.

As the economy begins to stabilize, lawyers and the court system must take leading roles to ensure that the mistakes of the past decade are not repeated. As a journal of legal practice, the Northeastern University Law Journal provided a forum for attorneys who are charting their course in the aftermath of the subprime mortgage foreclosure crisis to discuss the challenges they face.

We were honored to host a symposium in the spring of 2009 at which legal practitioners from across the nation came together to share ideas used to guide the continued legislative response to the subprime fallout and the representation of residents in the shadow of foreclosure, as well as assist in preventing a similar catastrophe from occurring in the future.

We are proud of our articles, our authors, and our staff. We would like to extend thanks to previous editorial boards of the Northeastern University Law Journal, our faculty advisors Professors Michael Meltsner, David Phillips, and Sonia Rolland, the Northeastern University School of Law administration, faculty and staff, our symposium participants, and our keynote speaker, Stuart Rossman of the National Consumer Law Center.

Northeastern University Law Journal
Editorial Board
January 2010

Notes

Regaining the Wonderful Life of Homeownership Post-Foreclosure pg5
Meg Rehrauer

Caveat Venditor: Predatory Purchasing in the
Post-Boom Residential Real Estate Market pg41
Brian Parkinson

Articles
A Judicial Response to the Subprime Lending Crisis pg67
Robert A. Kubica

Of Victims, Villains and Fairy Godmothers:
Regnant Tales of Predatory Lending pg97
Carolyn Grose

Causes of the Subprime Foreclosure Crisis and the
Availability of Class Action Responses pg137
Gary Klein & Shennan Kavanagh

Policy and Litigation Barriers to Fighting Predatory Lending pg193
Deborah Goldstein & Matthew Brinegar

Defending Foreclosure Actions by Bringing in Third Parties pg221
Michelle Weinberg

4closureFraud

Northeastern University LAW JOURNAL Vol. 2, No. 1 Spring 2010

Comments
3 Responses to “Northeastern University LAW JOURNAL Vol. 2, No. 1 Spring 2010”
  1. Alina says:

    This is a must read for everyone involved with foreclosure defense. The articles are extremely well written with plenty of case law cites. Kudos to the authors. They nailed it.

  2. Stupendous Man - Defender of Liberty - Foe of Tyranny says:

    I have read portions of this. It is amazing that students can and do see numerous layers of the fraud yet our experienced attorneys and jurists continue to remain willfully ignorance. I prefer not to consider the alternatives to “willfully ignorant.”

    Really people, this isn’t rocket science. A lot of it is pretty simple and basic black letter law.

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