Risk in the global real estate market : international risk regulation, mechanism design, foreclosures, title systems, and REITs

著者

    • Nwogugu, Michael C. I.

書誌事項

Risk in the global real estate market : international risk regulation, mechanism design, foreclosures, title systems, and REITs

Michael C. .I. Nwogugu

（Wiley finance series）

John Wiley & Sons, c2011

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注記

Includes bibliographical references and index

内容説明・目次

内容説明

Essential reading for professional investors, risk managers, regulators, central bankers, and real estate professionals, Risk in the Global Real Estate Market: International Risk Regulation, Mechanism Design, Foreclosures, Title Systems, and REITs takes an international look at the ways in which U.S.-style constitutional laws, financial laws, and real estate laws in various countries affect global economics and risk; and analyzes specific constraints that deter market development such as Asset Liability Matching, inappropriate financial products, land title systems, inefficient constitutions and human biases. The sub-prime mortgage crisis (that began around 2006) and the Global Financial Crisis of 2007 2010 disrupted the economies of various countries and exposed many of the psychological, social, and economic problems inherent in the legal/risk infrastructure for mortgages, land title systems, REITs, securitization, and pensions. In this remarkable new book, Michael Nwogugu explains how these processes and statutes are unconstitutional and inefficient, and how they influence demand for housing, real estate prices, retirement savings, household wealth, consumer disposable income, marriage opportunities, job markets, crime, and regional economic growth. The resulting major economic and public health problems have continued to reduce the quality-of-life of nations, and continue to cause permanent declines in wealth, increases in crime and delinquency, high divorce rates, depression, and inadequate job creation, among other problems. The book examines a range of fields including mechanism design, psychology, risk finance, and corporate governance; and emphasizes Constitutional economics as a distinct dimension of risk analysis. Risk in the Global Real Estate Market makes a compelling case about how constitutional torts increase information asymmetry, transaction costs, agency problems, and compliance costs, as well as inefficiency in real estate transactions. These problems, the book argues, are not unique to the United States, but also affect Commonwealth countries and other nations that have developed regulations that are similar to, or are based on U.S. commercial, securities, and or constitutional laws. Risk in the Global Real Estate Market presents a novel analysis of the sub-prime crisis (that first began in 2006), the failure of securitization (CMBS/MBS) markets, the Global Financial Crisis, and socio-economic problems caused by traditional mortgages and securitization. The book reveals that many of the statutes and processes that define mortgages, foreclosures, securitization, and REITs in the United States (and many common-law countries and nations that have adopted American-style real estate regulations) are fundamentally unconstitutional and inefficient, and have lasting negative effects on consumer psychology, the demand for real estate, price discovery in property markets, economic growth, and quality of life. The book examines the nature of constitutional torts and property rights as the foundation for business transactions and economic growth within the context of risk regulation, interstate commerce, takings, and legislation. Risk in the Global Real Estate Market introduces new theories of consumer psychology and institutional dynamics in real estate transactions; presents new theories of takings, and also surveys psychology/psychiatry studies (based on data from various countries) that confirm the harmful effects of mortgages, securitization, and foreclosures. Using elements of mechanism design, Michael Nwogugu develops new efficient financial products (Mortgage-Alternatives products), and presents a policy framework for a unified Mortgage-Alternatives market for the CEE/CIS region and China. He also explains why Asset Liability Matching hinders lending, capital formation and risk management, especially in developing countries.

目次

  • Preface xvii CHAPTER 1 Regulation and Constitutional Torts 1 Federalism, Preemption, and Risk 2 The Restoring American Financial Stability Act of 2010 (RAFSA) 6 The Existing Tests for Unconstitutionality 6 Quasi Constitutions 10 Social Capital 10 References 11 CHAPTER 2 A Critique of Mechanism Design 13 Conclusion 16 Reference 16 CHAPTER 3 General Public Health and Social Psychology Issues in Global Housing Markets and Mortgage Markets 17 Survey of Public Health Problems Caused by Traditional Mortgages and Foreclosures 18 Conclusion 32 References 32 CHAPTER 4 Public Health Issues: Psychological Factors Inherent in Housing Demand, Mortgage Demand, and House Prices 37 Proposition 1: Credit Bias 44 Proposition 2: The S&L Crisis Effect 44 Proposition 3: Tenure Bias 45 Proposition 4: Low Willingness to Accept Losses (WTAL) 46 Proposition 5: Investment Horizon Effect 46 Proposition 6: The Deferred-Disutility/Deferred Pain Bias 47 Proposition 7: The Lender-Experience Effect 48 Proposition 8: The Government Intervention Effect 49 Proposition 9: The Multiple-Listing-Service (MLS) Effect 50 Proposition 10: Psychological Limitations on Supply of Housing Units 50 Validity of Housing Demand Models 52 Conclusion 53 References 53 CHAPTER 5 Behavioral Biases in Property Taxation and Property Appraisal 59 Biases in Property Taxation 60 Psychological Effects and Biases Inherent in Property Appraisal 64 Conclusion 76 References 77 CHAPTER 6 Foreclosure Statutes and Processes 83 Foreclosures Reduce the Efficiency of Monetary Policies and Fiscal Policies 83 Some Adverse Contagion Effects of Foreclosures 84 The Statutory Ban of Waiver of Judicial Foreclosure in Conveyancing Documents and the Omission of Nonjudicial Foreclosure from States Laws Are Unconstitutional 85 The Borrower s Post-Foreclosure Right of Redemption Is Unconstitutional 93 The Unconstitutionality of Preemptive Foreclosure Rules 98 Enforcement of Core Foreclosure Processes and the Failure to Enact Uniform Federal Foreclosure and Mortgage Statutes Constitute Violations of the U.S. Constitution 103 Alternative Foreclosure Systems 109 New Theories of Takings 109 Conclusion 112 References 112 CHAPTER 7 Unconstitutionality of U.S. Bankruptcy Code, Preemption of State-Law Mortgage Foreclosure Statutes, and Related Economic Effects 115 Existing Literature 116 Survey of Macroeconomic Effects of Bankruptcy Codes 118 The Financial Accelerator Theory Is Inaccurate 126 Criteria for Preemption: Equitable Subordination, Fraudulent Transfers (the Reasonably Equivalent Value Doctrine), the Deprizio Controversy, and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 127 The U.S. Supreme Court s Standards for Preemption Cases 132 New Standards for Preemption Cases 135 Constitutional Law Issues 139 Due Process Rights 140 The Separation-of-Powers Doctrine 144 A New Theory of Takings 144 Conclusion 145 Note 146 References 147 CHAPTER 8 Mortgages and Deeds of Trust 151 Improper Coupling/Combinations of Mortgage Markets, Rental Markets, Savings/Investment Markets, and Property-Value Markets 152 Mortgages Cause Fraud and Misallocation of Risk 153 Traditional and Alternative Mortgages Are Inefficient and Create Wrong Incentives 154 Mortgages Reduce the Efficiency of Monetary Transmission 155 The Mortgage Wealth Illusion: Inefficient Household Allocations and Reduction of the Marginal Propensity to Save 160 Traditional and Alternative Western Mortgages Reduce Socioeconomic Flexibility that Substantially Affects Psychological Well-Being 161 Traditional and Alternative Mortgages Distort the Marriage Market 162 Traditional Western Mortgages and Alternative Mortgages Distort the Job Market 163 The Statutory or Common Law Prohibition of Prepayment Penalty/Yield Maintenance or Limitations on Prepayment Penalty on Default Are Unconstitutional 165 The Lack of Definition of the Future Advances Clause in Mortgages Constitutes a Violation of the U.S. Constitution 172 The Government s Failure to Enact Statutes that Define the Qualifications/Characteristics of a First Mortgagee 173 The Lender s Right to Receive Proceeds of Insurance and Condemnation (Arising from Real Estate) Is Not Codified 176 Anti-Deficiency Statutes Are Unconstitutional and the Lender s Right to Deficiency Judgment Must Remain Enforceable 180 New Theories of Takings 190 Conclusion 191 Notes 192 References 192 CHAPTER 9 Subprime Lending Is Unconstitutional 197 The State-Action Requirement: The Substitution Theory and Failure-to-Act as State Action 198 Subprime Lending Is Unconstitutional 198 Conclusion 201 Note 201 References 202 CHAPTER 10 Constitutionality of Real Property Title Systems 205 The Recording System and the Registration/Torrens System Are Unconstitutional 205 The Uniform Commercial Code (UCC), Title Systems, and Conflict of Laws 213 Conclusion 217 References 218 CHAPTER 11 Constitutionality of Real Estate Investment Trusts 219 The REIT Ownership-Concentration Rules Are Unconstitutional 227 The Regulation of REITs by U.S. States Constitutes Violations of the U.S. Constitution 233 The Entire REIT-Qualification Statutes (IRC Section-856, RMA, and AJCA REIT-Qualification Rules) Are Unconstitutional 235 The Mandatory REIT Dividend Payout Rule Violates the U.S. Constitution 242 The Government s Failure to Regulate Management Agreements of REITs Constitutes a Violation of the Equal Protection Clause of the U.S. Constitution 245 REITs Are Unconstitutional Because They Result in Illegal Misconduct 246 A New Theory of Takings 246 Conclusion 247 References 247 CHAPTER 12 Asset Securitization Is Unconstitutional and Should Be Banned 249 Securitization Dampens Monetary Transmission and Provides Wrong Incentives for Banks and Sponsors 250 Securitization Increases Transaction Costs, Systemic Risk, Inflation, and Hedging Costs 257 Securitization Constitutes a Violation of the Commerce Clause of the U.S. Constitution 260 Securitization Constitutes a Violation of the Free Speech Clause 261 Securitization Constitutes a Violation of the Right-to-Contract Clause of the U.S. Constitution and Is Illegal 262 Securitization Constitutes a Violation of the Equal Protection Clause 263 Securitization Constitutes a Violation of the Separation of Powers Doctrine 264 The Elements of Required New Regulations 265 The Implications of Change 267 Conclusion 269 References 270 CHAPTER 13 Recommendations for the Development of a Mortgage and Mortgage-Alternatives Market in the CIS Region, the CEE (Central and Eastern Europe) Region, and China 271 Surveys and Needs Assessment 277 Coordination among Institutions in CIS/CEE Countries and China 278 Establishment of Mortgage and Real Estate Research Networks (Institutes) 279 The Mortgage-Alternatives Funds 280 Legal Infrastructure 281 Credit Ratings Systems 293 Taxation 298 Pension Reform 300 Accounting and Transparency/Disclosure 300 Central Banks 301 Mortgage Insurance 302 Home-Equity Mortgages 303 Primary Mortgage Markets 304 Creation of Secondary Mortgage-Alternatives Markets 307 Statutory Ban of Traditional Western Securitization 308 Alternatives to Foreclosure 308 The Price-Discovery Process and Viability of Mortgage-Alternatives Markets 309 Monitoring Alternatives to Primary and Secondary Mortgage-Alternatives Markets 311 Incentives for Banks and Financial Institutions 314 Incentives for Borrowers/Buyers to Use Mortgage Alternatives 315 Risk-Management and Risk-Transfer Systems 315 References 316 CHAPTER 14 Asset-Liability Matching Is a Hindrance to Lending 323 Errors in the Formulas for Duration, Modified Duration (MD), and Convexity 324 Default/Bankruptcy Risk and Illiquidity 330 Existing Liquidity Derivatives (Swaps and Options) Are Inaccurate and Inefficient 337 Possible Solutions to the Perceived ALM Problem 339 Constitutionality of Central Bank Restrictions on Daily Cash Withdrawals by Customers 341 Conclusion 344 References 344 CHAPTER 15 New Mortgage-Alternative Products for Primary Mortgage Markets in China and CIS/CEE Countries 349 The Adjustable Balance Mortgage 351 The Continuous Workout Mortgage, Shared Appreciation Mortgages (SAMs), Shared Income Mortgages (SIMs), and Shared Equity Mortgages (SEMs) 353 Traditional Alternative Mortgages 354 Indexed Mortgages 356 Islamic Finance Products 357 Cooperative Mortgages 359 The Pricing of Mortgages and Behavioral Finance Most Models Are Inaccurate 359 Distortion of Economic Data and National Accounting 363 Banks/Lenders as Seller-Lenders (Installment Sales Contracts and Installment Land Contracts)
  • and Banks as Real Estate Brokers 364 Renegotiation and Sequential Investments 368 Recursion of Mortgages and the Perception of Defaults as Low-Probability Events 372 Characterization of the New Mortgage-Alternative Products 374 The New Mortgage-Alternative Products 381 Conclusion 410 Notes 410 References 411 CHAPTER 16 Conclusion 419 References 421 About the Author 423 Index 425

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