The Hill Op-Ed on the CFPB Agenda

My contribution. 

Consumer Law & Policy Roundup

by Deepak Gupta

Here's a small slice of what happened this busy week in the world of consumer law and policy:

• The foreclosure scandal continues to get a lot of ink. In today's Washington Post, Eugene Robinson has a column arguing, along the lines of Alan White's previous post,  that "Lawyers got it right on the foreclosure mess."  On his blog, Ezra Klein explored the case for and against a foreclosure moratorium, interviewing leading advocates on both sides.
• Senator Dodd gave a major speech on CFPB at NYU Law School on Tuesday in which he defended the agency and the decision to place it in the Fed. Most of the coverage of Dodd's speech has focused on his discussion of the appointment of the agency's first director: He expressed support for Elizabeth Warren but repeated concerns about a Senate confirmation fight. Watch a video of the speech here.
• Also on Tuesday, President Obama announced 12 appointments to the new President's Advisory Council on Financial Capability, a body created by the Dodd-Frank Act. At the White House blog, Assistant Treasury Secretary Michael Barr discussed the Council's role in improving consumer financial education.
• Consumers Union announced its agenda for the CFPB.
• Elizabeth Warren, who is seemingly everywhere at once, found time to sit down for a video chat at the White House, answering questions about the CFPB submitted by members of the public:

• Yeserday, state insurance regulators unanimously recommended major new health insurance rules, including medical-loss ratio rules. The recommendations now land on Kathleen Sebelius's desk.
• The EEOC held a hearing yesterday on the discriminatory impact of credit checks of prospective employees, an issue that's gotten a lot of attention lately, reports Nathan Koppell at the Wall Street Journal. The FTC offered testimony at the hearing on employers' obligations under the Fair Credit Reporting Act.

WSJ blames evil consumer lawyers

By Alan White

Although the Wall Street Journal has provided some excellent coverage of the foreclosure crisis, this story by Robbie Whelan (via Naked Capitalism rebuttal) is pure drivel.  The ludicrous premise is that a coterie of clever consumer lawyers have contrived to keep deadbeat homeowners out of foreclosure by raising silly technicalities.  Never mind that the case used as an illustration involved a homeowner whose timely payments were improperly refused by GMAC Mortgage, and is still in litigation. 

While I try, not always successfully, to provide dispassionate commentary about the foreclosure crisis, these attacks on the legal services lawyers and private practitioners who I know well make my blood boil.  These lawyers are the heroes of this crisis.  They are devoting countless hours not only to finding fraudulent affidavits, but also and more importantly to decoding servicer payment histories, endlessly resubmitting modification paperwork, trying to enforce bankruptcy plans, and getting servicers to acknowledge their own shockingly frequent errors.  Most of these consumer lawyers earn far less than their counterparts in the foreclosure mills and white shoe firms who are obsequiously protesting that banks can do no wrong. 

I know of not a single consumer lawyer who has any interest in representing a homeowner who is unwilling or unable to make payments.  Many homeowners are in foreclosure due entirely to servicer errors, such as double charging for insurance or misapplying payments.  Hundreds of thousands of homeowners in foreclosure not only want to pay but are paying in temporary HAMP and other plans right now.  They just want someone at their mortgage company to listen, and to accept their payments and get them out of foreclosure.  Modifications, contrary to popular belief, almost never involve ANY forgiveness of debt.  At best, modifications are giving them a temporary reduction in interest rates.  Our debtors are not even asking to be forgiven, they are simply asking to be heard before their homes are taken.  Now that the Attorneys General, and even the Cabinet and the media, are listening, the WSJ wants to shoot the messengers.   

The foreclosure crisis is a result of banks and Wall Street making and buying loans that were poorly underwritten.  It is being made worse month after month due to massive servicer (i.e. Big Bank) inability either to work out salvageable loans or to transfer and foreclose mortgages properly.  Hats off to the consumer lawyers who comfort the afflicted while the Journal comforts the comfortable.

Ray Brescia on New York's Response to the Latest Foreclosure Crisis

Here.

ACS Briefing on Concepcion

Here's the video of the American Constitution Society's panel discussion on AT&T v. Concepcion held on Tuesday at the National Press Club. If you want to hear some fireworks, skip forward to the presentation by Paul Bland (scroll down on the right). For more restrained academic commentary, listen to the presentations by Nina Pillard (providing an overview of the case) and Steve Ware (flagging what he takes to be AT&T's two key arguments, both having to do with the contours of state contract law).

First, BP Changed the Gulf Environmentally; Now, Its Money Is Changing the Gulf's Economic Landscape

Check this out.

Foreclosure Fraud Crisis - Good Explanation

Mike Konczal has posted a clear and basic explanation of the foreclosure fraud crisis, its causes and its potential impact, complete with diagrams and links to the best reporting.

Financial Incentives to Get People Out of Their Homes Quickly at Root of Flawed, Error-Ridden Foreclosure Process

That's the theme of this article in today's Washington Post. The story reports that participating lawyers were part of the problem:

Law firms competed with one another to file the largest number of foreclosures on behalf of lenders - and were rewarded for their work with bonuses. These and other companies that handled the preparation of documents were paid for volume, so they processed as many as they could en masse, leaving little time to read the paperwork and catch errors.

Would the Foreclosure Fraud Have Occurred if the CFPB Were Already Here?

An interesting article here.

Update on Dodd-Frank

A few months ago I put out a call for articles on the newly enacted Dodd–Frank Wall Street Reform and Consumer Protection Act. The result is, “Breaking Down Financial Reform: A Summary of the Major Consumer Protection Portions of the Dodd-Frank Wall Street Reform and Consumer Protection Act,” by Linda Singer, Zachary Best and Nina Simon, recently published in the Journal of Consumer and Commercial Law. I highly recommend this excellent article.

 

PS I also welcome submissions for our next issue which will appear in January. Send them in word format to alderman@uh.edu