I’m not posting an entire 26-page academic article on a blog, so instead you should go here to read it in its entirety. I wrote “ARMed and Dangerous: the Crime of Mortgage Fraud and What Congress Must Do to Stop It” in 2010, at the height (depth?) of the Great Recession, which was caused in large part by the collapse of the mortgage market precipitated by widespread mortgage defaults. This was a law school paper, written during my final year at American University’s Washington College of Law, and published in WCL’s brand new Legislation and Policy Roundtable.
In a nutshell, legislators at the state level were massively unprepared not only for the wave of foreclosures that caused a crisis, but by how many of those foreclosures were rooted in fraud and chicanery at the individual loan level. There were essentially no special protections that legislators had put in the criminal law (except in Maryland, oddly — Go Maryland!) against unscrupulous originators and shady lenders, who between them ushered millions of borrowers into insanely unaffordable home loans and eventually ruptured the financial dam. I called for legislative action at the state level, holding up Maryland’s tough standards as an example.
Six years later, I note that the silence from Washington I wrote about in law school has grown ever more conspicuous. Maybe the days of easy credit (especially in the form of home loans) are really over and we won’t have to worry about a second fraud-bubble, and maybe policymakers have just learned nothing from the past. And sure, maybe I had the wrong policy prescription, and should have focused on the inaction of the Fed, who at least on paper were supposed to be in charge of enforcing lending standards. (If you didn’t know that duty belonged to the Fed, yeah, get in line.)
The article was well received, especially for having been published in a brand new journal, and at last count has been downloaded over 1,600 times across the world. Its popularity in Calgary (seriously) and Dubai (no, seriously!) remains a mystery.
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