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The contributors to the Consumer Law & Policy blog are lawyers and law professors who practice, teach, or write about consumer law and policy. The blog is hosted by Public Citizen Litigation Group, but the views expressed here are solely those of the individual contributors (and don't necessarily reflect the views of institutions with which they are affiliated). To view the blog's policies, please click here.

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Friday, March 11, 2011

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David Pereira

This is an interesting analysis. In the base contract you have a borrower and a lender which has inherent good faith and fair dealing components to it. This "arms-length" 1:1 relationship is clearly understood. If I have an issue, I can merely call the lender. Over time, this progressed to loans being sold in which your loan got sold to someone else and when you have an issue, you merely call the new lender that brought your loan. Securitization has eliminated this inherent good faith and fair dealing component in that you can no longer address these issues 1:1. The net result is this modern servicer between the lender and borrower model has broken down communication and the evidence shows that the borrower no longer has a good faith and fair dealing element. Sadly, the courts are unwilling to recognize good faith and fair dealing in most real estate loans therefore the consumer is screwed again.

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