Thomas J. Fitzpatrick, IV |

Assistant Vice President


Thomas J. Fitzpatrick, IV, Assistant Vice President

Thomas Fitzpatrick is an assistant vice president in the Credit Risk Management Department at the Federal Reserve Bank of Cleveland. He is responsible for credit administration, payment system risk, reserve maintenance, and risk management for depository institutions in the Fourth Federal Reserve District, which includes Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Mr. Fitzpatrick joined the Cleveland Reserve Bank in 2007 as a research associate in the Research Department. He served as a visiting scholar in 2008, and in 2009, he was appointed an economist in the Policy Analysis Department, where his work focused on structured finance and large financial firm insolvency. In 2010, Mr. Fitzpatrick transferred to the Community Development Department, where his research focused on housing finance and urban housing, housing-market dynamics, consumer finance, and the impact of land banks on neighborhoods. He assumed his current position in April, 2014.

Mr. Fitzpatrick holds a bachelor’s degree in philosophy and psychology from the College of Wooster and a juris doctorate degree from Cleveland-Marshall College of Law at Cleveland State University. He is a member of the Ohio and the American Bar Associations. He serves as a trustee for the Cleveland Association for Business Economics and as a board member for the Cuyahoga County Land Bank. He is also a board member for the Legal Alumni of Wooster and a law student mentor at Cleveland State University’s Cleveland-Marshall College of Law.

  • Fed Publications
  • Other Publications
  • Work in Progress
Title Date Publication Author(s) Type

 

2014-03 ; Kyle Fee; Economic Commentary
Abstract: All the signs in the housing market seem to be pointing the right way, except the amount of time loans are spending in the foreclosure process. Foreclosure fast-tracks for vacant homes in foreclosure may help reverse that trend.

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June, 2013 Vol. 4, No. 1 ; Forefront
Abstract: Five policy considerations for improving Ohio’s housing markets.

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January, 2013 Vol. 3, No. 3 ; Forefront
Abstract: A low-profile but enormously important group of appointed lawyers and judges is working behind the scenes

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December, 2012 Federal Reserve Bank of Cleveland, working paper no. 12-40 ; Lisa A Nelson; Francisca G-C Richter; Stephan Whitaker; Working Papers
Abstract: The housing and economic crises have exerted a strong and lingering impact on housing markets across the nation. In this paper, we assess the degree to which local anti-blight policies have infl uenced housing market outcomes following the crises. The analysis is performed for cities in Cuyahoga County, Ohio. We measure outcomes that characterize market distress and that may be influenced by local housing ordinances including foreclosure, bulk sales, flipping, vacancy, and tax delinquency. Using matching procedures on linked data containing property, loan, and transaction characteristics, we compare outcomes across properties in regulated and unregulated municipalities. Point of sale inspections and vacancy registrations both decrease the probability that homes are flipped (resold within two years). We find that point of sale inspections are positively associated with foreclosures, property tax delinquency, and sales prices below the tax assessed value. The inspections may be revealing the need for expensive repairs in some homes, which could push borrowers underwater and into foreclosure. We find evidence that vacancy registration requirements do lower vacancy. The discussion around policies for housing market recovery, for the most part, has addressed efforts at the federal level. This analysis integrates in discussion of efforts and policies arising at the local level.

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November, 2012 Federal Reserve Bank of Cleveland, working paper no. 12-30 ; Stephan Whitaker; Working Papers
Abstract: Cuyahoga County created a land bank in 2009 explicitly intended to acquire low-value properties, mitigate blighted housing, help stabilize neighborhoods, and slow the decline of property values. This paper evaluates the effectiveness of the land bank by estimating spatially-corrected hedonic price models using sales near the land bank homes. Homes that sold within 500 feet of a property that would be acquired by the land bank in the next six months show a 3 to 5 percent discount versus observationally similar homes. Homes that sold within 500 feet of a land bank owned home sold at prices approximately 5 percent higher than similar homes. A land bank demolition appears to have a positive externality, which adds 9 percent to the value of a nearby home sale. These results are consistent through a wide variety of specifications, but they are not measured precisely enough to be statistically significant.

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November, 2012 Federal Reserve Bank of Cleveland, working paper no. 12-23 ; Amy B Monahan; Working Papers
Abstract: This article presents the results of a qualitative study of the funding and governance provisions of 12 public pension plans that are a mix of state and local plans of various funding levels. We find that none of the plans in our study satisfy the best practices that have been established by expert panels, but also that the strength of a plan's governance provisions does not appear correlated with the plan's financial health. Our most important finding is that, regardless of the content of a plan's governance provisions, such provisions are almost never effectively enforced. This lack of enforcement, we theorize, has a significant, detrimental impact on plan funding and governance. If neither plan participants nor state taxpayers are able to effectively monitor and challenge a state's inadequate funding or improper investment decisions, public plans are very likely to remain underfunded. We conclude by offering several possible reform options to address the monitoring and enforcement problems made clear by our study: automatic benefit haircuts, automatic tax increases, a low-risk investment requirement, and market monitoring through the use of modified pension obligation bonds.

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2012-03 ; Stephan Whitaker; Economic Commentary
Abstract: Swelling REO inventories are the latest fallout of the housing crisis, costing lenders money and contributing to neighborhood blight. Yet lenders could avoid taking on so much REO if they could more accurately estimate the value of the homes they foreclose on, especially in weak housing markets. Correcting this apparent misunderstanding of the market could speed the clearing of REO inventories, save lenders money, and help stabilize housing markets.

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2012-01 ; Moira Kearney-Marks; James B Thomson; Economic Commentary
Abstract: Everyone recognizes the need to have a credible resolution regime in place for financial companies whose failure could harm the entire financial system, but people disagree about which regime is best. The emergence of the parallel banking system has led policymakers to reconsider the dividing line between firms that should be resolved in bankruptcy and firms that should be subject to a special resolution regime. A look at the history of insolvency resolution in this country suggests that a blended approach is worth considering. Activities that have potential systemic impact might be best handled administratively, while all other claims could be dealt with under a court-supervised resolution.

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January, 2012 Vol. 3, No. 1 ; Forefront
Abstract: When a lender takes ownership of foreclosed property, it gets a new name—real estate owned—and goes back into the hands of the lender. And for scores of lenders and neighborhoods, that's a problem.

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2011-25 ; Mary Zenker; Economic Commentary
Abstract: The fall in property values associated with the recent recession has caused a decline in property taxes which may be amplifying local government budget crises across the country. Cuyahoga County is set to reappraise property values in 2012, and when it does it may only then absorb the full force of the housing market losses caused by the recession. We estimate the potential losses in property values and the county’s tax base and find that the impact could be significant.

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2011-23 ; James B Thomson; Economic Commentary
Abstract: There is disagreement about whether large and complex financial institutions should be allowed to use U.S. bankruptcy law to reorganize when they get into financial difficulty. We look at the Lehman example for lessons about whether bankruptcy law might be a better alternative to bailouts or to resolution under the Dodd-Frank Act's orderly liquidation authority. We find that there is no clear evidence that bankruptcy law is insufficient to handle the resolution of large complex financial firms.

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September, 2011 Federal Reserve Bank of Cleveland, working paper no. 1123R ; Stephan Whitaker; Working Papers
Abstract: In this empirical analysis, we estimate the impact of vacancy, neglect associated with property-tax delinquency, and foreclosures on the value of neighboring homes using parcel-level observations. Numerous studies have estimated the impact of foreclosures on neighboring properties, and these papers theorize that the foreclosure impact works partially through creating vacant and neglected homes. To our knowledge, this is only the second attempt to estimate the impact of vacancy itself and the first to estimate the impact of tax-delinquent properties on neighboring home sales. We link vacancy observations from Postal Service data with property-tax delinquency and sales data from Cuyahoga County (the county encompassing Cleveland, Ohio). We estimate hedonic price models with corrections for spatial autocorrelation. We find that an additional property within 500 feet that is vacant, delinquent, or both reduces the home's selling price by at least 1.3 percent. In low-poverty areas, tax-current foreclosed homes have large negative impacts of 4.6 percent. In high-poverty areas, we observe positive correlations of sale prices with tax-current foreclosures and negative correlations with tax-delinquent foreclosures. This may reflect selective foreclosing on better-maintained properties or better maintenance by tax-paying foreclosure auction winners. The marginal medium-poverty census tracts display the largest negative responses to vacancy and delinquency in nearby nonforeclosed homes.

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2011-16 ; Mark B Greenlee; James B Thomson; Economic Commentary
Abstract:

How to best manage the failure of systemically important financial firms was the theme of a recent conference at which the latest research on the issue was presented. Here we summarize that research, the discussions that it sparked, and the areas where considerable work remains.


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False Security: How Securitization Failed to Protect Arrangers and Investors from Borrower Claims

 

April, 2011 Federal Reserve Bank of Cleveland, working paper no. 11-09 ; Kathleen Engel; Working Papers
Abstract: The future of housing finance is in a state of flux. In February 2011, the Obama Administration released a proposal outlining three plans for the future of housing finance. In all three plans, Freddie Mac and Fannie Mae will be phased out over a period of years and replaced with a private securitization market, which may be backed, in whole or in part, by a government guarantee. Whether the final plan relies upon government-guaranteed securities or private-label securities, Congress will have to resolve a range of complex legal aspects of securitization, from the bankruptcy remoteness of pools of securities to setting national standards for loans and financing. One issue that does not appear to be getting much attention is the potential liability of the parties to a securitization for the unlawful actions of loan originators. In this paper, the authors take the position that any new housing finance system must clarify the liability of participants in the securitization pipeline so that the market can more accurately price securities up front and create incentives for more effective compliance programs to stop problem loans from entering the pipeline.(PDF)

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March, 2011 Vol. 2, No. 1 ; Ozgur Emre Ergungor; Forefront
Abstract: In the City of Cleveland, 8.2 percent of the housing stock sits vacant or abandoned, according to the U.S. Postal Service.

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2011-01 ; James B Thomson; Economic Commentary
Abstract: One of the changes introduced by the sweeping new financial market legislation of the Dodd–Frank Act is the provision of a formal process for liquidating large financial firms—something that would have been useful in 2008, when troubles at Lehman Brothers, AIG, and Merrill Lynch threatened to damage the entire U.S. financial system. While it may not be the end of the too-big-to-fail problem, the orderly liquidation authority is an important new tool in the regulatory toolkit. It will enable regulators to safely close and wind up the affairs of those distressed financial firms whose failure could destabilize the financial system.

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December 28, 2010 ; Joseph Ott; CR Report
Abstract: As the number of foreclosures continues to rise across the country, many policymakers are creating alternatives to foreclosure. Two counties in the Federal Reserve's Fourth District—Cuyahoga County in Ohio, which encompasses Cleveland, and Allegheny County in Pennsylvania, encompassing Pittsburgh—have developed mediation and diversion programs aimed at mitigating the externalities associated with foreclosure, such as reduced property values and increased crime rates in surrounding neighborhoods.

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2010-9 ; James B Thomson; Economic Commentary
Abstract: One type of financial reform being proposed to deal with the aftermath of the housing crisis is allowing bankruptcy judges the authority to modify residential mortgages in a way referred to as a stripdown. The reform is seen by some as a partial solution to the rise in foreclosures and as a Pandora’s box by others. But the debate is not new one. The 1980s farm foreclosure crisis sparked similar proposals and concerns. Congress decided to enact legislation that contained a stripdown provision, resulting in the creation of Chapter 12 in the bankruptcy code. The effects of Chapter 12 stripdown authority after its enactment shed light on the efficacy of allowing bankruptcy judges similar authority for housing loans.

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May, 2010 Vol. 1, No. 2 ; Forefront
Abstract: In its first year, the Land Bank of Cuyahoga County, Ohio, took strides toward becoming the model approach to the vacancy and abandonment problem that state lawmakers hoped it would be.

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December, 2009 Vol. 1, No. 1 ; Forefront
Abstract: The financial crisis has produced no shortage of culprits—from Wall Street executives who were highly compensated for taking excessive risks to woefully undercapitalized insurance companies. Then there are the so-called credit rating organizations, or CROs, which have largely flown under the radar. How was it possible that CROs such as Moody’s and Standard & Poor’s handed out so many high—quality ratings to investment vehicles that turned out to be so high-risk?

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December, 2009 Vol. 1, No. 1 ; Daniel A Littman; Stephan Whitaker; Forefront
Abstract: In the wake of the mortgage meltdown, policymakers are discussing how best to protect consumers in financial product markets. The Federal Reserve Bank of Cleveland hosted a seminar, “Consumer Protection in Financial Product Markets,” in September 2009 to exchange ideas with other regulators about consumer protection and the role of the courts.

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December, 2009 Vol. 1, No. 1 ; Daniel A Littman; Stephan Whitaker; Forefront
Abstract: Watch economists with the Federal Reserve Bank of Cleveland discuss their takeaways from the September 11, 2009, seminar on consumer protection.

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January 2009 Federal Reserve Bank of Cleveland, Policy Discussion Paper, no. 25 ; Policy Discussion Papers
Abstract: The effects of sustained high rates of foreclosure on numerous areas of Cuyahoga County have thrust land banking to the forefront of recent public policy discussions in Ohio. This Policy Discussion Paper seeks to inform those discussions by explaining the state’s traditional land banking system and illustrating how the new land banking system, spelled out in Senate Bill 353/House Bill 602 and signed into law January 2009, works.

Originally published January 6, 2009. Updated January 30, 2009, to reflect changes in legislation.

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November 2008 Federal Reserve Bank of Cleveland, Working Paper no. 0808 ; Mark B Greenlee; Working Papers
Abstract: In this paper we investigate the history of negotiable instruments and the holder in due course rule and contrast their function and consequences in the 1700s with their function and consequences today. We explain how the holder in due course rule works and identify ways in which the rule’s application is limited in some consumer transactions. In particular, we focus on laws limiting application of the rule to some home mortgage loans. We investigate Lord Mansfield’s original justification for the rule as a money substitute, the lack of explicit justification of the rule by the drafters of the Uniform Commercial Code in the 1950s, the contemporary justification of the rule as a means of increasing the availability and decreasing the cost of credit, and the concerns of legislators and regulators about lack of consumer knowledge, bargaining power, and financial resources which caused them to limit the application of the holder in due course rule to some consumer transactions. We conclude that changes in policy justification, parties to negotiable instruments and the structure of the home mortgage market call for a reconsideration of the continuing appropriateness of holder in due course protection for assignees of home mortgage notes. We suggest further analysis based on economic theory and review of empirical research in order to formulate policy recommendations.

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Title Date Publication Author(s) Type
Who's Afraid of Good Governance? State Fiscal Crises, Public Pension Underfunding, and Resistance to Governance Reform

 

December, 2013 Florida Law Review, forthcoming ; Journal Article

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Deconstructing Distressed-Property Spillovers: The Effects of Vacant, Tax-Delinquent, and Foreclosed Properties in Housing Submarkets

 

April, 2013 Journal of Housing Economics, vol. 22 ; Stephan Whitaker; Journal Article

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Lehman Brothers Bankruptcy: What Lessons Can Be Drawn??

 

December, 2012 The New Palgrave Dictionary of Economics ; Article in Book

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Complexity, Complicity, and Liability Up the Securitization Food Chain: How Securitization Failed to Protect Arrangers and Investors from Borrower Claims

 

January, 2012 Harvard Business Law Review vol. 2:2 ; Journal Article

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A Framework for Consumer Protection in Home Mortgage Lending

 

January, 2011 In The American Mortgage System: Crisis and Reform (University of Pennsylvania Press, 2011) ; Article in Book

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Credit Rating Organizations, Their Role in the Current Calamity, and Future Prospects for Reform

 

September, 2010 In Lessons from the Financial Crisis: Causes, Consequences, and Our Economic Future (John Wiley & Sons, Inc. 2010) ; Chris Sagers; Article in Book

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September, 2010 In REO and Vacant Properties: Strategies for Neighborhood Stabilization. Federal Reserve Bank of Boston and Cleveland and the Federal Reserve Board (2010). ; Article in Book

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Ohio's Land Banking Legislation: Modernizing an Aged Model

 

April, 2010 Journal on Affordable Housing and Community Development Law, vol. 19:3 (Spring 2010) ; Journal Article

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Faith-Based Financial Regulation: A Primer on the Oversight of Credit Rating Organizations

 

September, 2009 Administrative Law Review, vol. 61:3 (September 2009) ; Chris Sagers; Journal Article

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Reconsidering the Application of the Holder in Due Course Rule to Home Mortgage Notes

 

July, 2009 Uniform Commercial Code Law Journal, vol. 41 ; Mark B Greenlee; Journal Article

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Title Date Publication Author(s) Type
The Impact of Local Ordinances on Housing and Housing Finance

 

October, 2011 ; Lisa A Nelson; Francisca G-C Richter; Unpublished manuscript

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The Impact of Cramdowns on Mortgage Markets: Lessons from the Farm Credit Crisis

 

October, 2011 ; Ben R Craig; James B Thomson; Unpublished manuscript

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