SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

SEC Approves New Securitization Risk Retention Rule with Broad Exception for Qualified Residential Mortgages

November 26, 2014 — Neil P. Casey & Lori S. Smith – White and Williams LLP
The Securities and Exchange Commission (SEC) and five other federal agencies recently approved a joint rule (the “Risk Retention Rule”) mandating that sponsors of certain types of securitizations retain a minimum level of credit risk exposure in those transactions and prohibiting such sponsors from transferring or hedging against that retained credit risk.[i]The final Risk Retention Rule will be effective one year after its publication in the Federal Register for securitizations of residential mortgages, and two years after publication for securitizations of all other asset types. The SEC vote was 3-2, with sharp dissents from Commissioners Gallagher and Piwowar concluding that the adopting agencies had missed a prime opportunity to rein in risky mortgage lending practices that had precipitated the 2008 financial crisis. Background Following the meltdown of the securitization markets in 2007 (particularly subprime residential mortgage-backed securities), and the resulting global financial crisis, the Dodd-Frank Act mandated that the U.S. federal banking, securities and housing agencies adopt and implement rules to require sponsors of most new securitizations to retain not less than five percent of the credit risk of any assets that the securitizer, through the issuance of an asset-backed security, transfers, sells or conveys to a third party. It was thought that requiring securitization sponsors to keep “skin in the game” would align the interests of the sponsors with the interests of investors and thereby incentivize the sponsors to ensure the quality of the assets underlying the securitization through appropriate due diligence and underwriting procedures when selecting assets for securitization. Although the Dodd-Frank Act explicitly exempted securitizations of certain types of mortgage loans called “qualified residential mortgages” (or “QRMs”) from this risk retention requirement, it invited the rulemaking agencies to define that key term, provided that their definition could be no broader than the definition of “qualified mortgage”adopted by the Consumer Financial Protection Bureau (CFPB) pursuant to the Truth in Lending Act.[ii] In considering how to define QRM, the rulemaking agencies were directed by the Dodd-Frank Act to take into consideration “underwriting and product features that historical loan performance data indicate result in a lower risk of default.”[iii] Reprinted courtesy of Neil P. Casey, White and Williams LLP and Lori S. Smith, White and Williams LLP Mr. Casey may be contacted at caseyn@whiteandwilliams.com; Ms. Smith may be contacted at smithl@whiteandwilliams.com Read the court decision
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Want to Build Affordable Housing in the Heart of Paris? Make It Chic.

November 01, 2022 — Marie Patino & Kriston Capps - Bloomberg
The project at 12 Rue Jean-Bart is a modest one, just eight units of affordable housing on a narrow lot in Paris near the Luxembourg Gardens. The social housing project nevertheless caused a stir with neighbors in the 6th arrondissement, one of the city’s more affluent areas. When local politicians backing the project came to visit the building during its construction, neighbors shouted from windows across the street that it was a shame to build social housing here, according to Jean-Christophe Quinton, the Paris-based architect who designed the small in-fill development. Local resistance was a persistent feature of the project throughout its three-year-long construction, Quinton says; the building regularly faced harsh scrutiny in local newspaper Le Parisien. Reprinted courtesy of Marie Patino, Bloomberg and Kriston Capps, Bloomberg Read the court decision
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Housing Starts Surge 23% in Comeback for Canadian Builders

July 15, 2019 — Theophilos Argitis - Bloomberg
Canadian housing starts unexpectedly surged in April, in another sign of recovery for the nation’s battered real estate market. Builders started work on an annualized 235,460 units last month, the highest level in 10 months and up 23 percent from 191,981 units in March, the Canada Mortgage and Housing Corp. reported Wednesday. The gain was driven by new multi-unit construction in Toronto and Vancouver. Read the court decision
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Viewpoint: Firms Should Begin to Analyze Lessons Learned in 2020

January 04, 2021 — Rich Friedman - Engineering News-Record
If there’s one phrase that describes 2020, it was not “business as usual.” How AEC firms fared last year depended upon their strategies for navigating an uncertain landscape. While we talk about finding a new normal, company leaders in 2021 will have to think more expansively about what they want that “normal” to look like. Reprinted courtesy of Rich Friedman, Engineering News-Record ENR may be contacted at ENR.com@bnpmedia.com Read the full story... Read the court decision
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Bankrupt Canada Contractor Execs Ordered to Repay $26 Million

April 25, 2022 — Scott Van Voorhis - Engineering News-Record
John Aquino, the former president of a major and now bankrupt Ontario construction contractor, plans to appeal a provincial court ruling that puts him and his associates on the hook for $26.2 million drained from the company, according to his attorney. Reprinted courtesy of Scott Van Voorhis, Engineering News-Record ENR may be contacted at enr@enr.com Read the full story... Read the court decision
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Steps to Defending against Construction Defect Lawsuits

July 21, 2011 — CDJ STAFF

Writing in Claims Journal, Bryan Rendzio notes that the decline in construction has not been matched by a decline in construction defect lawsuits over condominiums. He reviews the ways in which lawyers representing developers can help protect their clients. He identifies four important considerations in defending developers from claims of construction defects.



He advocates a careful review of the contract. “Under a breach of contract claim, the insured’s duties to the party who brought the claim against the insured flow from the contract. Commonly, construction contracts limit the scope of recoverable damages, such as by waiving consequential damages.’



The next step, according to Rendzio is to check of a settlement agreement is already in place, noting that these are “a familiar occurrence in the construction industry, regardless of any lawsuits having been filed.”



He considers the statute of repose “the single-most decisive weapon an insured possesses in its arsenal during a condo defect lawsuit.” He notes that no lawsuits can be brought for construction defects after the end specified by the statute of repose, and if a lawsuit is brought beforehand, no additional parties can be named once the statute has taken effect.



Finally, he warns adjusters to be suspicious when a condo association requests contractual indemnification. He notes that the pitfall in this is that developers and the subsequent condominium association often have similar names, given the theoretical example of a condo project built by “Fake Lakes LLC” and later run by the “Fake Lakes Condominium Association.” Writing in regards to Florida law, he notes that condominium associations do not have successor interest in contracts developers made with contractors.

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Trends in Project Delivery Methods in Construction

April 03, 2023 — Sarah B. Biser - ConsensusDocs
The three key measures of a construction project’s success are cost, quality, and time (delays). The project delivery method that the owner of the project selects can affect each of these metrics. Project delivery methods in complex construction projects evolve as technology and processes improve. The traditional methods of design-bid-build (DBB), design-build (DB), and construction management (CM) have been the standard for many years. More recently, however, newer methods such as integrated project delivery (IPD), and public-private partnerships (PPP) have gained traction. Design – Bid – Build (DBB) Design-bid-build is the oldest, most commonly used method of project delivery. It involves three distinct phases: design, bid/award, and construction. An owner asks a team of professionals, such as architects, engineers, and contractors, to produce design documents that will be used to solicit bids. After the owner evaluates the bids and chooses a contractor, a construction contract is written. While this method is the most familiar and well-understood, it can lead to disputes during the construction process as changes are made to the original plans. In DBB, the owner bears the risk for funding increased costs attributed to design changes and related delays – thanks to the Spearin Doctrine, which holds that the owner impliedly warrants the information, plans, and specifications that it provides to a general contractor. See 248 U.S. 132 (1918) Although the owner cannot claim against the contractor, it can make a claim against the design firm. Read the court decision
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Reprinted courtesy of Sarah B. Biser, Fox Rothschild LLP (ConsensusDocs)
Ms. Biser may be contacted at sbiser@foxrothschild.com

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Reasons to Be Skeptical About a Millennial Homebuying Boom in 2016

December 10, 2015 — Patrick Clark – Bloomberg
Predicting whether millennials are finally going to start buying homes in large numbers has become a seasonal sporting event for real estate experts (also something resembling a periodic parental nag). There's good reason for the abiding fixation. Millennials are the largest generation in the U.S. labor force and something akin to guppies in the housing market food chain: When a first-time buyer moves into an entry-level house, it lets the sellers upgrade. But they've been held back by housing price increases that outpace wage hikes, not to mention limited access to credit, and rising rents that make it harder to save for a down payment. Will next year be the year that millennials1 finally satisfy builders and real estate agents (not to mention mom and dad) by making their presence felt in the housing market? Yes, but not to the degree that many might hope. Millennials will make up the largest share of homebuyers in 2016 This is more of a demographic inevitability than a prediction. Historically, the largest share of U.S. homebuyers have been between 25 and 34 years old. Millennials will buy one out of three homes in 2016, predicts Jonathan Smoke, chief economist for Realtor.com, a small uptick from this year. If you prefer your glass half empty, though, Zillow Chief Economist Svenja Gudell thinks the median age of first-time home buyers will hit a new high next year. In either case, Americans will continue the trend of buying their first homes later in life than they did in past decades, as the chart below shows—likely due to some mix of wage stagnation, rising housing costs, and a tendency to start families later in life. Read the court decision
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