Rewriting Frankenstein Contracts

[Joanne98]

posted by Adam Levitin

A bit of shameless self-promotion: former Credit Slips guest blogger Anna Gelpern and I have a new paper, "Rewriting Frankenstein Contracts: Workout Prohibitions in Residential Mortgage-Backed Securities" posted to SSRN. Increasing attention has been paid to the problems securitization contracts (pooling and servicing agreements) pose to modification of troubled mortgages. Our paper situates RMBS contracts in the contract theory literature and argues for eliminating workout prohibitions through targeted legislation and administrative mandates. En route to this conclusion, we try to construct a typology of contract rigidities (formal-structural-functional), and review New Deal jurisprudence on rewriting payment-in-gold clauses in contracts, breaking up utility holding companies, and stopping farm foreclosures. The abstract is below the break.


http://www.creditslips.org/creditslips/2009/03/rewriting-frankenstein-contracts.html#more