Abstract
This article aims to reframe the scholarly discussion about securitizations—transactions in which multiple passive investors use a special purpose entity to take passive fractional ownership shares in one or more assets—in the context of residential real property interests. Residential real property securitizations (including mortgage-backed securities and real estate investment trusts) are relatively modern financial instruments and so are relatively underexamined from a policy perspective, and this article seeks to evaluate whether residential real property interests are amenable to securitization at all, concluding that they are not. In so doing, this article uses the principles of property law to present a new reading of the central issues in both today’s residential real estate market and in the lead-up to the 2007 financial crisis: instead of being a problem of the borrowers’ inability to repay, the actual problem was lenders gambling on assets they did not want to own and could not steward. This article advances a broad normative definition of securitization, describing common aspects across a variety of securitization transactions and explaining the benefits of securitizations to investors across a variety of asset classes. This article then explains why residential real property securitizations are distinct from securitizations of other asset classes, detailing why such securitizations are bad for investors, renters, homebuyers, and community members in which securitized properties are situated, highlighting the social dimension of residential real property’s value that is effaced by securitization. Finally, this article addresses the policy implications of this perspective, suggesting several paths forward to promote more equitable, community-based ownership of residential real property.
Recommended Citation
Luke Maher,
On the Securitization of Residential Real Property,
56
N.M. L. Rev.
319
(2026).
Available at:
https://digitalrepository.unm.edu/nmlr/vol56/iss2/4
