Announcing JLR’s 2021 Symposium: “The Poverty Penalty: America’s Overuse of Fines and Fees”

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The Michigan Journal of Law Reform is pleased to announce that its 2021 Symposium, “The Poverty Penalty: America’s Overuse of Fines and Fees” will take place January 25-29, 2021 as a series of five virtual talks from 12:00 – 1:00 pm EST. Each panel will take place via zoom and registration is required for each panel. Zoom links will be provided to all registered participants prior to the start of each panel. Please visit our website povertypenaltyjlr.com to register and for more information about the event.

Serving-Up the ACE: Understanding Adverse Childhood Experiences (“ACE”) in Dependency Adoption Through the Lens of Social Science

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54 U. Mich. J. L. Reform Caveat

Cynthia G. Hawkins* and Taylor Scribner**

I. Introduction

The damage done to us during our childhood cannot be undone, since we cannot change anything in our past. We can, however, change ourselves. We can repair ourselves and gain our lost integrity by choosing to look more closely at the knowledge that is stored inside our bodies and bringing this closer to our awareness. This path, although certainly not easy, is the only route by which we can leave behind the cruel, invisible prison of our childhood. We become free by transforming ourselves from unaware victims of the past into responsible individuals in the present, who are aware of our past and are thus able to live with it.1

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A Better Madden Fix: Holistic Reform, Not Band-aids, to Modernize Banking Law

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54 U. Mich. J. L. Reform Caveat

Matthew J. Razzano*

Introduction

Historically, state usury laws prohibited lending above certain interest rates, but in 1978 the Supreme Court interpreted the National Bank Act (NBA) to allow chartered banks to issue loans at rates based on where they were headquartered rather than where the loan originated.1 States like South Dakota virtually eliminated interest rate ceilings to attract business, incentivizing national banks to base credit operations there and avoid local usury laws.2 In 2015, however, the Second Circuit decided Madden v. Midland Funding, LLC and reversed long-standing banking practices, ruling that non-chartered financial institutions were not covered by the NBA and were therefore subject to state usury laws where the loan originated.3 The underlying reasoning for the court’s decision was well-intentioned and based on (a) an unwillingness to allow non-chartered institutions to function as pseudo-banks4 and (b) a desire to protect consumers.5 The court’s radical decision received widespread criticism,6 and empirical studies have demonstrated a noteworthy decrease in credit availability in the Second Circuit7—negating the court’s own policy rationales. Since Madden, Congress and federal agencies have attempted an outright reversal, but none of their solutions address the Madden court’s fundamental concerns. This Essay argues that a Madden fix is needed, but the most effective solution must incorporate and address the Second Circuit’s underlying concerns.

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Volume 53 Issue 4 Summer 2020

Introduction

Dispossessing Detroit: How the Law Takes Property (pdf)
Mary Kathlin Sickel

Articles

Dispossessing Resident Voice: Municipal Receiverships and the Public Trust (pdf)
Juliet M. Moringiello

Tell Me How It Ends: The Path to Nationalizing the U.S. Pharmaceutical Industry (pdf)
Fran Quigley

Note

Eighteen Is Not a Magic Number: Why the Eighth Amendment Requires Protection for Youth Aged Eighteen to Twenty-Five (pdf)
Tirza A. Mullin

Volume 53 Issue 3 Spring 2020

Articles

Dignity Transacted: Emotional Labor and the Racialized Workplace (pdf)
Lu-in Wang and Zachary W. Brewster

Revisiting Immutability: Competing Frameworks for Adjudicating Asylum Claims Based on Membership in a Particular Social Group (pdf)
Talia Shiff

Calculating Compensation Sums for Private Law Wrongs: Underlying Imprecisions, Necessary Questions, and Toward a Plausible Account of Damages for Lost Years of Life (pdf)
Michael Pressman

Notes

A More Perfect Pickering Test: Janus v. AFSCME Council 31 and the Problem of Public Employee Speech (pdf)
Alexandra J. Gilewicz

Resolving ALJ Removal Protections Problem Following Lucia (pdf)
Spencer Davenport

Volume 53 Issue 2 Winter 2020

Articles

“A World of Steel-Eyed Death”: An Empirical Evaluation of the Failure of the Strickland Standard to Ensure Adequate Counsel to Defendants with Mental Disabilities Facing the Death Penalty (pdf)
Michael L. Perlin, Talia Roitberg Harmon, and Sarah Chatt

Dismantling the Master’s House: Toward a Justice-Based Theory of Community Economic Development (pdf)
Etienne C. Toussaint

The City and the Soul: Character and Thriving in Law and Politics (pdf)
Sherman J. Clark

Waiving Federal Sovereign Immunity in Original Actions Between States (pdf)
Sandra Zellmer

Notes

Making a Reasonable Calculation: A Strategic Amendment to the IDEA (pdf)
Hetali M. Lodaya

Volume 53 Issue 1 Winter 2020

Articles
Age of Unreason: Rationality and the Regulatory State (pdf)
Louise Weinberg

Making and Unmaking Citizens: Law and the Shaping of Civic Capacity (pdf)
Tabatha Abu El-Haj

Searching for Humanitarian Discretion in Immigration Enforcement: Reflections on a Year as an Immigration Attorney in the Trump Era (pdf)
Nina Rabin

Constitutional Cohesion and the Right to Public Health (pdf)
James G. Hodge Jr.; Daniel Aaron; Haley R. Augur; Ashley Cheff; Joseph Daval; Drew Hensley;

Notes
Policing Corporate Conduct Toward Minority Communities: An Insurance Law Perspective on the Use of Race in Calculating Tort Damages (pdf)
Dhruti J. Patel

“Dispossessing Detroit” Videos

We hope you were able to join us for “Dispossessing Detroit”! The JLR team was thrilled to host a wonderful day of engaging sessions and conversation.

Recordings of each talk can be found below. We hope you’ll re-watch your favorite parts and let these questions continue to challenge you!

Property Dispossession is Nothing New: A Historical Overview
Panel discussion on the historical instances of land dispossession experienced by people living in the Detroit area and more broadly.

  • Bernadette AtuaheneProfessor of Law, Chicago-Kent College of Law
  • Beryl SatterProfessor of History, Rutgers University-Newark
  • Louise SeamsterAssistant Professor of Sociology and Criminology and African American Studies, University of Iowa
  • Michael WitgenDirector of the Native American Studies, Program and Associate Professor of History and American Culture, University of Michigan

Municipal Bankruptcy: Who Gets What?
Panel discussion comparing the experiences of Detroit, Puerto Rico, and Harrisburg, PA and the citizens who call these places home during and after bankruptcy proceedings.

  • Michelle AndersonProfessor of Law, Stanford Law School
  • Juliet MoringielloAssociate Dean for Research and Faculty Development and Professor of Law, Widener University, Commonwealth Law School
  • John PottowJohn Philip Dawson Collegiate Professor of Law, University of Michigan Law School
  • David SkeelS. Samuel Arsht Professor of Corporate Law, University of Pennsylvania Law School 

Dispossession in Other Forms: A Closer Look at Detroit 

Right of Refusal 

  • Michele OberholtzerDirector of Tax Foreclosure Prevention, United Community Housing Coalition 
  • Eli SavitSenior Advisor to Detroit Mayor Mike Duggan

Changes in the Detroit Real Estate Market

  • Joshua AkersAssistant Professor of Geography and Urban & Regional Studies, University of Michigan-Dearborn

MorningSide v. Sabree: The Tax Foreclosure Crisis

How Data Informs Policy

No video available

Ramifications of Dispossession: Activism and Lived Experiences
A panel discussion addressing the ways dispossession has affected community members and activists. 

  • Sonja Bonnet, Community Legal Worker, Detroit Justice Center
  • David Pitawanakwat, J.D. Candidate, University of Detroit Mercy School of Law and University of Windsor Faculty of Law  
  • Simone Sagovac, Southwest Detroit Community Benefits Coalition

Revitalization Today: Urban Renewal and Eminent Domain
Panel discussion on the role of revitalization efforts in cities throughout the country. 

Closing Remarks
Small group discussions with speakers and participants discussing reforms to current issues of land dispossession. Small groups will reconvene to report possible reforms.

Special thanks to Shawn Deloach for AV assistance!

Dispossessing Residents: Municipal Bankruptcy and the Public Trust

Juliet Moringiello, Associate Dean for Research and Faculty Development, Widener University Commonwealth Law School, Harrisburg, PA 

Municipal bankruptcy occupies an obscure corner of bankruptcy law. Although the federal law for resolving municipal financial distress is located in chapter 9 of the Bankruptcy Code, there are significant differences between the bankruptcy processes used for municipal bankruptcy and the bankruptcy processes used by individuals and business entities. Constitutional constraints imposed by the balance between federal and state power enshrined in the Tenth Amendment dictate much of the structure of chapter 9. As a result, chapter 9 lacks some of the governance controls that exist in the other bankruptcy chapters.

Another significant difference between municipal bankruptcy and other types of bankruptcy is the role of bankruptcy in distributing the debtor’s property. A liquidation bankruptcy under chapter 7 distributes all of a debtor’s property to its creditors, which  is the floor for distributions in a reorganization bankruptcy. According to the public trust doctrine, a municipality has no property that can be forcibly distributed to its creditors. Municipal property belongs to all of the municipality’s residents and is thus held in trust by the municipality, immune from seizure by creditors.

So why talk about bankruptcy in a symposium about dispossessing Detroit? One of the most contentious issues in municipal bankruptcy is the treatment of pensions, and indeed bankruptcy can result in reduced pension payouts. But all residents stand to lose something in bankruptcy that is not property and is not always entitled to constitutional protection: voice.

Some criticize the municipal bankruptcy process because it leaves control of the bankruptcy in the hands of the municipality and therefore effects no change in the conditions that led to the bankruptcy in the first place. If a dysfunctional city government played a role in the distress that led to bankruptcy, there is nothing in the Bankruptcy Code to dislodge that government. While true, that’s only one half of the story. Chapter 9 of the Bankruptcy Code was designed to work with state financial intervention schemes. We saw that in Detroit, where the Emergency Manager had the primary role of guiding the city through the bankruptcy.

Back to dispossession and the public trust. There are several types of intervention – in Michigan, the Emergency Manager displaces city government as a bankruptcy decisionmaker. In Pennsylvania, a municipal receiver does not displace city government. The receiver takes the lead in making the decisions necessary to resolve municipal financial distress but must work with the elected officials to implement a recovery plan. Any municipal recovery plan can involve the sale of municipal property because the public trust doctrine means only that such property is immune from a forced sale, not a voluntary sale. Outside of the property context, public trust can mean trust in the process, and if the state insolvency scheme is viewed as a takeover, the citizens will feel dispossessed of their voice. In fashioning an intervention process, states should consider the impact of that process on the voice of the residents who are so critical to a city’s ongoing recovery.

Contract Selling as a Form of Property Dispossession

Beryl Satter
Professor of History, Rutgers University-Newark

A sure-fire way to lose one’s property is to pay too much for it — or to buy it on terms that are so onerous as to be predatory.  Both problems are endemic to properties purchased “on contract,” that is, on an installment plan.  I detailed the full repercussions of predatory contract sales in my 2009 book Family Properties: How the Struggle Over Race and Real Estate Transformed Chicago and Urban America.  That book described the mid-twentieth century exploitation of black Chicago homebuyers through predatory contract home purchases, a period during which banks’ refusal to make mortgage loans to African Americans left many with no alternative but to buy on contract.  Unfortunately, since the 2008 subprime meltdown, the practice has been revived, with predictably tragic results.

From the buyer’s perspective, purchasing a property on contract (also known as an “installment land contract,” “contract for deed,” or legally, “Articles of Agreement for Warranty Deed”), combines the worst of buying and renting.   In a contract sale the seller of the property provides the credit for the purchase – but on harsh terms.  Buyers must make a down payment.  They are also responsible for taxes, insurance, maintenance, and interest.  However, most installment land contracts specify that if the buyer misses even a single payment, the contract seller can repossess the property, keeping everything that the buyer invested to date.  Most also specify that all maintenance on the property is the responsibility of the contract buyer.  If the price charged for the property is excessive, or if maintenance costs are unusually high, then a missed payment and subsequent loss of the property is not uncommon.

In the mid-twentieth century, contract selling became an easy way for white speculators to exploit African Americans’ dreams of home ownership.   In cities across the country, speculators used borrowed money to buy properties from whites.  They then immediately sold those properties on contract to black buyers – routinely charging them double, and sometimes quadruple, the prices they’d paid.  Black buyers who could not keep up the exploitative payments lost their homes.  In Chicago, many of the most active contract sellers repossessed scores of properties every year – retaining the down payment and all money that their black buyers had invested to date. 

Contract selling died down in the 1970s as the now nominally illegal practice of bank redlining lessened in frequency, and as flawed federal housing programs created new ways to exploit black homebuyers.[i]  Unfortunately, it has reemerged in full force since the 2008 subprime meltdown.  Hedge Funds like Harbor Portfolio Advisors have purchased thousands of foreclosed homes from Fannie Mae (the Federal National Mortgage Association) for about $5000 each. They sell these properties days later at massive markups — $30,000 to $60,000 each. These properties have often been abandoned for years, and are in severely deteriorated condition, yet the contract buyer is solely responsible for the often staggering costs of restoring them to a habitable condition.  These costs mire them in debt and force them to miss payments, ensuring the loss of their properties.  Once again, those with plentiful access to credit are using contract sales to manipulate minority buyers’ dreams of mobility in order to entrap and defraud them, resulting in enrichment for the hedge funds, and property dispossession for those most in need. [ii]


[i] On the 1970s FHA-HUD scandal, see Keeanga-Yamahtta Taylor, Race For Profit:  How Banks and the Real Estate Industry Undermined Black Homeownership (University of North Carolina Press, 2019). 

[ii] On the recent resurgence of predatory contract selling, see Jeremiah Battle Jr., Sarah Mancini, Margot Saunders, and Odette Williamson, “Toxic Transactions:  How Land Installment Contraacts Once Again Threaten Communities of Color,” National Consumer Law Center, July 2016, https://www.nclc.org/issues/toxic-transactions-threaten-communities-of-color.html