Note

A Market-Based Tool to Reduce Systematic Undervaluation of Collateral in Residential Mortgage Foreclosures

This Note addresses the problem of the systematic undervaluation of collateral in residential mortgage foreclosures. Public policymakers have been wrestling with this problem for nearly a century. As a result of the perceived flaws in the typical foreclosure auction, public authorities have tried to supplement the auctions with various rules intended to encourage higher sale prices or to protect against substantial undervaluation. While each of the supplemental devices promulgated by public policymakers has its strengths and weaknesses, none of them has completely solved the undervaluation problem.

This Note uses the underlying principles of credit bidding in bankruptcy proceedings to develop a new market-based tool that can deter the systematic undervaluation of collateral in residential mortgage foreclosures. Deficiency forfeiture sales options—the tool developed in this Note—target the two main problems with foreclosure auctions: (1) accurately determining the fair market value of the underlying property and (2) incentivizing lenders to bid that value at the auction. Similar to credit bidding, the new tool proposed by this Note will result in a transfer of wealth from lenders to borrowers, but only if lenders bid or collude with or tolerate third-party bidders who bid below the fair market value of the underlying property at the foreclosure auction. The threat of this permanent transfer of wealth from the lender to the borrower should be an effective and efficient deterrent of systematic undervaluation of collateral in residential mortgage foreclosures, just as the threat of a transfer of value from a bankrupt estate to a secured creditor as a result of credit bidding deters undervaluation in bankruptcy proceedings.

Common Sense about Common Decency: Promoting a New Standard for Guard-on-Inmate Sexual Abuse under the Eighth Amendment

When inmates claim they are sexually abused by their prison guards, many courts scrutinize their claims to determine, as a threshold inquiry, whether they allege objectively serious injury. Courts often hold that guard-on-inmate sexual abuse does not inflict that level of injury, and therefore does not violate the Eighth Amendment or impose cruel and unusual punishment.

The dominant body of law arrives at the wrong conclusion because it focuses on the wrong question.  It asks whether guard-on-inmate sexual abuse imposes a threshold level of physical or psychological harm on an inmate. Instead, Eighth Amendment case law should simply ask whether a guard’s sexual abuse of an inmate, as specifically defined in current federal law, can be justified by any legitimate prison-management purpose. If it cannot, the law should presume that guard-on-inmate conduct violates contemporary standards of decency, and thus violates the Eighth Amendment.

This Note will demonstrate that courts’ misdirected focus has negative ramifications beyond its maladjustment to our society’s contemporary standards of decency. First, courts are less likely to find that male inmates meet the injury threshold. Consequently, the dominant standard often results in male inmates receiving less recognition and relief than female or transgender inmates for psychological injuries suffered from sexual abuse. Second, this disparate treatment and certain language in the case law promote a discourse about gender that proves problematic for men, women, and transgender persons alike.

Through this Note, I offer two fairly simple solutions to eliminate this disparate treatment and adjust Eighth Amendment standards to more closely correspond with current sexual abuse law and societal norms. Using emerging case law and Supreme Court precedent, I enumerate specific standards that advocates and courts can use to properly redirect the focus of the Eighth Amendment inquiry from the injury threshold to whether contemporary standards of decency have been violated by guard-on-inmate sexual abuse. State and federal law show our current societal norms deeply condemn such abuse, and suggest courts should presume violations of contemporary standards of decency in specified circumstances of sexual abuse.

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