Roy Oppenheim’s commentary was originally published in US News and World Report’s Home Front Blog and is being redistributed on South Florida Law Blog with their permission
Whether it’s the national mortgage settlement or the Independent Foreclosure Review, each of these 30,000 foot foreclosure prevention initiatives promise us an end to fraudulent practices and better standards in home mortgage lending.
But most of these programs are like vampires with dentures, they lack real bite. As long as Wall Street and the government resemble a Human Centipede, that will always be the case.
The new mortgage lending rules issued this month by the Consumer Financial Protection Bureau—which will be implemented starting in 2014—look great on paper, but as before these rules lack a thorough enforcement arm. And without one, what is the point of putting new lending policies in place at all?
In employment law, private right of action allows any employee improperly compensated to sue for unpaid overtime and recover attorney’s fees if they win the case. In other words, private right of action means individuals can enforce the law on behalf of the government.
If ever there was an area of consumer protection that screams for a private right of action, it would be any regulation that addresses home mortgage standards. Still, the CFPB admits no such right exists for borrowers in these new regulations.
When it comes to the banks and big business, they still have the dazzling ability to pull a fast one on regulators. Over the past 10 years they have been able to lobby politicians to ensure that the only way certain laws get enforced is through government involvement and government enforcement alone.