New Product: Mortgage Crisis Call

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The financial crisis of the late 2000’s has just hit and more than 10 million homes have been foreclosed upon in the matter of a few years.

The American public is outraged and demanding that politicians take action. Much of the blame for the crisis has fallen on banks, especially the five banks with the highest percentage of U.S. residential mortgages: Ally (formerly known as GMAC), Bank of America, Citi, JPMorgan Chase, and Wells Fargo (collectively known as “The Five”). In an effort to hold The Five accountable, a multi-state working group comprised of all fifty state attorneys general, state Banking Commissioners, and the Department of Justice have decided to pursue action against them.

Participants in Mortgage Crisis Call play the roles of prominent attorneys general from around the country, including U.S. Attorney General Eric Holder, who are leading the charge to hold The Five accountable. This special committee is scheduled to hold a group phone call, the purpose of which is to agree on a strategy for addressing the banks. They will need to decide whether they want to pursue unified litigation, and if so, what form this will take.

The call is an exercise in balancing competing interests and complex power dynamics in a multi-party negotiation. Each of the participants has a distinct set of interests, often enmeshed in their political calculations and their histories of working on this issue, and these interests come together in their attitudes about how to settle with The Five.

Importantly, the exact role of each participant on the call is left up to the group. For a variety of reasons, several members of the special committee believe that it is their role to facilitate the call. Participants have an opportunity to explore the ways in which a facilitator or facilitators can shape a multi-party negotiation, particularly in a situation where there is no designated official facilitator. Moreover, it comes as a surprise to them to find out that there are in fact others who plan to facilitate. This element of surprise exacerbates power dynamics and heightens the need for clarity about roles and responsibilities on the call.

Mortgage Crisis Call is designed to be conducted as a conference call, giving students a chance to practice facilitating through that medium. The simulation can also be done as an in-person multi-party negotiation. The ideal group size is six participants to fill all six of the roles. It is also possible, though not ideal, to eliminate one or two of the non-Facilitator roles and run the simulation in groups of fewer than six participants. For a robust debrief, it is preferable to have at least two different groups negotiating the case. It is suggested that instructors allot 90 minutes for the negotiation and 60 minutes for debriefing. The Teaching Notes also help those new to the case design debriefs to ensure a rich learning experience.

To download Mortgage Crisis Call, visit HLS Case Studies. Educators and staff of non-profit institutions are eligible to receive review copies free of charge.