Consumer Protection Law Commons^™

Facilitating Mortgage Modification To Save Homes And Mitigate Lender Losses, Julia Patterson Forrester Rogers

Faculty Journal Articles and Book Chapters

Homeowners in financial distress or whose homes have been damaged by natural disaster may avoid foreclosure if their lender agrees to modify the loan to reduce payments. Commercial loans may also be modified to avoid foreclosure or in response to changed circumstances or changing market conditions. Although loan modifications are generally beneficial to both borrowers and lenders, barriers to modification exist. The Consumer Financial Protection Bureau (CFPB) has addressed some of the roadblocks to residential loan modifications by regulating the procedures that mortgage servicers must follow in dealing with delinquent borrowers, but the CFPB and its regulations are at risk …

Why Bigger Is Not Always Better: Dodd-Frank & Its Impact On Small Banks & Businesses, Sarah King

Journal of Civil Rights and Economic Development

(Excerpt)

Imagine that the year is 2006. Along with partners and investors, you have just taken one of the biggest risks of your life and founded a small business. Specifically, your business acts as a broker of financial instruments known as energy derivatives; it matches buyers and sellers of futures, options, and other derivatives, and a portion of the money made from the trade is collected as a fee for your services. For the most part, the business runs smoothly. You’re rarely stressed, your customers are satisfied with your services, and you and your co-workers make good money.

Imagine that …

Unsafe At Any Campus: Don't Let Colleges Become The Next Cruise Ships, Nursing Homes, And Food Processing Plants, Peter H. Huang, Debra S. Austin Dr

Indiana Law Journal

The decision to educate our students via in-person or online learning environments while COVID-19 is unrestrained is a false choice, when the clear path to achieve our chief objective safely, the education of our students, can be done online. Our decision-making should be guided by the overriding principle that people matter more than money. We recognize that lost tuition revenue if students delay or defer education is an institutional concern, but we posit that many students and parents would prefer a safer online alternative to riskier in-person options, especially as we get closer to fall, and American death tolls rise. …

Recent Developments Concerning The Purchase Of Consumer Debt; Defining Potential Problems And Proposals For Suggested Solutions, Gerald A. Williams

The Journal of Business, Entrepreneurship & the Law

No abstract provided.

Protecting San Francisco Residents From The Wolves Of Wall Street: A Case Study, Jessica Lindquist

Master's Projects and Capstones

This research conducts the first deep data analysis of the public complaints filed to the Consumer Financial Protection Bureau's Consumer Complaint database by San Francisco residents. The case study highlights how consumer financial harms are a citywide problem: San Franciscans living at every income level and in every part of the city are struggling to resolve their financial issues with the wolves of Wall Street, the financial services industry. The recommendations center on what the city, particularly the San Francisco Office of Financial Empowerment, can do at a local level now that the Trump administration is focused on deregulating the …

The Cfpb’S Endaround, Chris O'Brien

Catholic University Law Review

The financial crisis of 2008 led Congress to enact the Dodd-Frank Wall Street Reform and Consumer Protection Act and establish the Consumer Financial Protection Bureau (CFPB) to better protect consumers. Although Dodd-Frank and the CFPB introduced sweeping changes to many areas of financial lending, automobile dealers and financers were expressly excluded from oversight by the CFPB. Despite this express limitation on the CFPB’s authority, the Bureau nonetheless expanded its definition of “larger participants” to encompass automobile dealers and financiers. This action has resulted in duplicative regulatory oversight and increased costs to consumers, which in turn, imposes additional burdens on those …

Consumer Bitcredit And Fintech Lending, Christopher K. Odinet

Faculty Scholarship

The digital economy is changing everything, including how we borrow money. In the wake of the 2008 crisis, banks pulled back in their lending and, as a result, many consumers and small businesses found themselves unable to access credit. A wave of online firms called fintech lenders have filled the space left vacant by traditional financial institutions. These platforms are fast making antiques out of many mainstream lending practices, such as long paper applications and face-to-face meetings. Instead, through underwriting by automation — utilizing big data (including social media data) and machine learning — loan processing that once took days …

The Regulation Of Residential Real Estate Finance Under Trump, David Reiss

Cornell Law Faculty Publications

Reducing Regulation and Controlling Regulatory Costs was one of President Trump’s first Executive Orders. He signed it on January 30, 2017, just days after his inauguration. It states that it “is the policy of the executive branch to be prudent and financially responsible in the expenditure of funds, from both public and private sources. . . . [I]t is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.” The Reducing Regulation Executive Order outlined a broad deregulatory agenda, but was short on details other than the requirement that every new …

The Trump Administration And Residential Real Estate Finance, David Reiss

Cornell Law Faculty Publications

An executive order titled “Reducing Regulation and Controlling Regulatory Costs” was one of President Donald Trump’s first executive orders. He signed it Jan. 30, 2017, just days after his inauguration. It states: “It is the policy of the executive branch to be prudent and financially responsible in the expenditure of funds, from both public and private sources. … It is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with federal regulations.” This executive order outlined a broad deregulatory agenda, but it was short on details other than setting a requirement that every …

The Consumer Financial Protection Bureau's Structural Integrity And A Call For Adaptive And Incremental Agency Design Policy, Hannah Clendening

Indiana Law Journal

INTRODUCTION

I. UNDERSTANDING AND RATIONALIZING COMPETING DESIGN OBJECTIVES

A. CONGRESSIONAL INTENT AND THE CFPB’S FORMATION

B. D.C. CIRCUIT’S REASONING IN PHH CORP. V. CONSUMER FINANCIAL PROTECTION BUREAU

C. BASIC TENETS OF LEADING ORGANIZATIONAL DESIGN THEORIES

D. ANOTHER LOOMING CONSIDERATION: AGENCY CAPTURE

II. A NEED FOR ADAPTIVE AND INCREMENTAL APPROACHES TO AGENCY DESIGN

CONCLUSION

Assessing The Efficacy Of The Cfpb's Regulation Of Student Loan Companies, Ian E. Calhoun

Georgia Law Review

Outstanding student loan balances totaled over
$1.38 trillion as of December 31, 2017 with 11% of
student loan debt over ninety days delinquent or in
default. Due to half of all student loans being in
deferment, grace periods, or forbearance, the actual
delinquency rate is likely double the above figure.
Delinquent student borrowers enrolled in some form of
college education expect to improve their financial
position. Instead, many find themselves unable to break
even under the weight of large amounts of debt with
confusing, and often misleading, repayment plans.
Many blame the lending practices of student loan
providers and servicers …

Choosing Corporations Over Consumers: The Financial Choice Act Of 2017 And The Cfpb, Christopher L. Peterson

Utah Law Faculty Scholarship

The Financial Choice Act of 2017 is appropriately named in at least one sense: its proposed restrictions on the authority of the Consumer Financial Protection Bureau reflect a choice by the House of Representatives to protect financial companies at the expense of consumers. This choice is borne out by the data. As this empirical review of CFPB enforcement cases demonstrates, nearly all of the relief provided to American consumers in CFPB enforcement cases arose where a bank, credit union, or other finance company deceived their customers about a material aspect of their product or service. Between 2012 and 2016, the …

Consumer Financial Protection And Human Rights, Chrystin Ondersma

Cornell International Law Journal

This summer the Consumer Financial Protection Bureau proposed a rule that would restrict the use of mandatory arbitration clauses in consumer financial credit contracts. With the administration and Congress seemingly eager to pull back on consumer financial regulations, it is crucial to examine the rights at stake. Many financial institutions have agreed to protect and promote human rights, so pressure from consumers, human rights organizations, and consumer protection advocates may succeed even though Congress has declined to promulgate the CFPB’s proposed rule. This Article argues that the existing binding, mandatory arbitration system in consumer credit contracts is inconsistent with human …

Regulating Debt Collection, Christopher K. Odinet, Roederick C. White

Faculty Scholarship

Debt collection. It often starts as a late night call carrying threats of being thrown in prison, ruin at the workplace, and trouble for the family unless you pay up. While the law actually prohibits some of these tactics, most consumers do not know their legal rights, which leave much to be desired, or fail to exercise them when faced with the harassing practices of some debt collectors. Moreover, the debt collection industry as a whole — both massive and sophisticated — lacks the incentives to self-police or internally punish bad actors. In July 2016 the Consumer Financial Protection Bureau …

Mandatory Arbitration In Consumer Finance And Investor Contracts, Michael S. Barr

Book Chapters

This chapter focuses on the use of mandatory pre-dispute arbitration clauses in a subset of consumer contracts – those involving consumer finance and investor products and services. Arbitration clauses are pervasive in financial contracts – for credit cards, bank accounts, auto loans, broker-dealer services, and many others. In the wake of the recent financial crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). Dodd-Frank authorises the new Consumer Financial Protection Bureau (CFPB) and the Securities and Exchange Commission (SEC) to prohibit or condition the use of arbitration clauses in consumer finance and investment contracts, …

Underwriting Sustainable Homeownership: The Federal Housing Administration And The Low Down Payment Loan, David Reiss

Cornell Law Faculty Publications

The United States Federal Housing Administration (“FHA”) has been a versatile tool of government since it was created during the Great Depression. The FHA was created in large part to inject liquidity into a moribund mortgage market. It succeeded wonderfully, with rapid growth during the late 1930s. The federal government repositioned it a number of times over the following decades to achieve a variety of additional social goals. These goals included supporting civilian mobilization during World War II; helping veterans returning from the War; stabilizing urban housing markets during the 1960s; and expanding minority homeownership rates during the 1990s. It …

Consumer Financial Protection Bureau Law Enforcement: An Empirical Review, Christopher L. Peterson

Utah Law Faculty Scholarship

In the aftermath of the U.S. financial crisis, Congress created a new federal agency — the Consumer Financial Protection Bureau (CFPB) — with the goal of fashioning a more just and efficient American consumer finance market. The CFPB now serves as the U.S. Government’s primary regulator and civil law enforcement agency governing consumer lending, payment systems, debt collection, and other consumer financial services. In its first four years of enforcing federal consumer protection laws, the CFPB has announced over a hundred different law enforcement cases forcing banks and other financial companies to relinquish over $11 billion in customer refunds, forgiven …

Hurrah For The Consumer Financial Protection Bureau: Consumer Arbitration As A Poster Child For Regulation, Jean R. Sternlight

St. Mary's Law Journal

Abstract forthcoming.

Hurrah For The Consumer Financial Protection Bureau: Consumer Arbitration As A Poster Child For Regulation, Jean R. Sternlight

Scholarly Works

Drawing on economic, psychological and philosophical considerations, this Essay considers whether consumers should be "free" to "agree" to contractually trade their opportunity to litigate in a class action for the opportunity to bring an arbitration claim against a company. The Essay suggests that by looking at the CFPB's regulation through these three lenses, one sees that the regulation is desirable—even a poster child—for the potential value of regulation when market forces are not sufficient to protect individual or public interests.

The Cfpb Anti-Arbitration Proposal: Let's Just Give Arbitration A Chance., Ramona L. Lampley

St. Mary's Law Journal

Abstract forthcoming.

The Funny Thing About Forced Arbitration And The Cfpb, Joanne Doroshow

Other Publications

No abstract provided.

"What We Lose In Sales, We Make Up In Volume": The Faulty Logic Of The Financial Services Industry's Response To The Consumer Financial Protection Bureau's Proposed Rule Prohibiting Class Action Bans In Arbitration Clauses, Richard Frankel

St. Mary's Law Journal

Abstract forthcoming.

Mandatory Arbitration In Consumer Finance And Investor Contracts, Michael S. Barr

Articles

Mandatory pre-dispute arbitration clauses are pervasive in consumer financial and investor contracts—for credit cards, bank accounts, auto loans, broker-dealer services, and many others. These clauses often ill serve households. Consumers are typically presented with contracts on a “take it or leave it” basis, with no ability to negotiate over terms. Arbitration provisions are often not clearly disclosed, and in any event are not salient for consumers, who do not focus on the importance of the provision in the event that a dispute over the contract later arises, and who may misforecast the likelihood of being in such a dispute. The …

The Future Of The Private Label Securities Market, David J. Reiss

Cornell Law Faculty Working Papers

The PLS market, like all markets, cycles from greed to fear, from boom to bust. The mortgage market is still in the fear part of the cycle and recent government interventions in it have, undoubtedly, added to that fear. In recent days, there has been a lot of industry pushback against the government’s approach, including threats to pull out of various sectors. But the government should not chart its course based on today’s news reports. Rather, it should identify fundamentals and stick to them. In particular, its regulatory approach should reflect an attempt to align incentives of market actors with …

Armed, Unarmed Or Harmed By Knowledge? A Comment On The Fha's Housing Counseling Pilot Program, David J. Reiss

Cornell Law Faculty Working Papers

The FHA has requested input on its Homeowners Armed with Knowledge (HAWK) for New Homebuyers pilot program. This comment letter argues that housing counseling is not a proven solution to the problem it is meant to solve, excessive defaults by FHA borrowers. HAWK is a traditional housing counseling program but the scholarly literature casts into doubt the efficacy of such programs. It would be better to take time to research which counseling strategies, if any, are proven to be effective. This is true for the FHA but also for other government agencies, such as the Consumer Financial Protection Bureau, that …

The Future Of Fannie And Freddie, Mark Calabria, David Reiss, Lawrence White, Mark Willis

Cornell Law Faculty Publications

This is a transcript of a panel discussion titled, “The Future of Fannie and Freddie.” The panelists were Dr. Mark Calabria from the Cato Institute; Professor David Reiss from Brooklyn Law School; Professor Lawrence White from NYU Stern School of Business; and Dr. Mark Willis from NYU’s Furman Center for Real Estate and Urban Policy. The panel was moderated by Professor Michael Levine from NYU School of Law. Panelists looked at economic policy and future prospects for Fannie and Freddie. The remarks have not been edited by the panelists.

Third Party Funding Of Personal Injury Tort Claims: Keep The Baby And Change The Bathwater, Terrence Cain

Chicago-Kent Law Review

In the early 1990s, a period of high-risk lending at high interest rates, a new entrant emerged in civil litigation: the Litigation Finance Company (“LFC”). LFCs advance money to plaintiffs involved in contingency fee litigation. The money is provided on a non-recourse basis, meaning the plaintiff repays the LFC only if she obtains money from the lawsuit through a settlement, judgment, or verdict. If the plaintiff recovers nothing, she will not owe the LFC anything. When she does repay the LFC, however, she could end up paying as much as 280% of the amount advanced by the LFC. As one …

"We Buy Houses": Market Heroes Or Criminals?, Cori Harvey

Journal Publications

The residential sale/leaseback/buyback transaction is a socially beneficial foreclosure rescue transaction that is being regulated increasingly by the criminal courts to the detriment of the homeowners, investors, and society at large. Because the transaction is being regulated more aggressively with the criminal law, peculiar outcomes arise, which include investors being sentenced, in some cases, to draconian sentences --a trend that will eviscerate the transactions rather than improving them.

In calling for a retreat from that position, this Article makes both descriptive and prescriptive claims. The first descriptive claim is that the transaction is a beneficial one and that it has …

Contract And Choice, Peter B. Rutledge, Christopher R. Drahozal

Scholarly Works

This Article contributes to an ongoing debate, afoot in academic, legal, and policy circles, over the future of consumer arbitration. Utilizing a newly available database of credit card agreements, the Article offers an in-depth examination of dispute resolution practices within the credit card industry. In some respects, the data cast doubt on the conventional wisdom about the pervasiveness of arbitration clauses in consumer contracts and the presence of unfair terms. For example, the vast majority of credit card issuers do not utilize arbitration clauses, and by the end of 201 0, the majority of credit card debt was not subject …

Consumer Financial Protection And Community Banks, John T. Adams

University of Arkansas at Little Rock Law Review

The Dodd-Frank Act (Dodd-Frank) was enacted following the 2007-2008 financial crisis as the result of calls in Washington to protect average Americans from the depredations of Wall Street. Specifically, proponents of Dodd-Frank pointed to greed, carried out through the business practices at large commercial and investment banks, as the cause of the financial crisis. Accordingly, Dodd-Frank sought to place the most stringent restrictions on the activities of large commercial and investment banks of any legislation since the Great Depression.

However, the perception of rapacious business practices on Wall Street does not apply as directly to community banks. Situated somewhere between …