Abstract

http://ssrn.com/abstract=1471306
 
 

References (125)



 
 

Citations (7)



 


 



The Legal Infrastructure of Subprime and Nontraditional Home Mortgages


Patricia A. McCoy


Boston College Law School

Elizabeth Renuart


Albany Law School

November 1, 2007

BORROWING TO LIVE: CONSUMER AND MORTGAGE CREDIT REVISITED, Nicolas P. Retsinas, Eric S. Belsky, eds., Joint Center for Housing Studies, Harvard University, James A. Johnson Metro Series, Brookings Institution Press, November 2008

Abstract:     
This paper provides a critical analysis of the legal landscape of residential mortgage lending and explains how federal law abdicated regulation of the subprime market. First, the paper presents the historical backdrop to government oversight of mortgage lending and identifies the changes to and innovations in the lending process that contributed to the recent transformation of the residential mortgage market. We then describe recent attempts at the state and federal level to re-regulate and the backlash initiated by the federal banking agencies to thwart regulation of their constituent banks through preemption, resulting in parallel universes of regulation. Next, the article discusses the consequences of deregulation and preemption on state governments, lending business models, the rule of law, and enforcement of law by consumers and supervisory agencies. Finally, we connect the legal structure of the capital markets and the complexities created by funding agreements, including loan servicing contracts, to direct adverse impacts upon distressed homeowners. Where their loans were securitized - as were the vast majority of loans - the antiquated legal doctrines surrounding securitization strip those borrowers of most claims and defenses in foreclosure actions brought by securitized trusts. The dialectic of federal deregulation, state re-regulation, and federal preemption has produced a dual system of regulation in which increasing numbers of aggrieved borrowers are stripped of defenses to foreclosure. This same dialectic explains why major lenders have flocked to federal preemption under the national bank and federal savings association umbrellas.

Number of Pages in PDF File: 59

Keywords: mortgage, subprime, nontraditional mortgage, preemption, consumer credit, servicing, banking regulators, adjustable-rate mortgage

working papers series


Download This Paper

Date posted: September 14, 2009  

Suggested Citation

McCoy, Patricia A. and Renuart, Elizabeth, The Legal Infrastructure of Subprime and Nontraditional Home Mortgages (November 1, 2007). BORROWING TO LIVE: CONSUMER AND MORTGAGE CREDIT REVISITED, Nicolas P. Retsinas, Eric S. Belsky, eds., Joint Center for Housing Studies, Harvard University, James A. Johnson Metro Series, Brookings Institution Press, November 2008. Available at SSRN: http://ssrn.com/abstract=1471306 or http://dx.doi.org/10.2139/ssrn.1471306

Contact Information

Patricia Ann McCoy
Boston College Law School ( email )
885 Centre Street
Newton, MA 02459-1163
United States

Elizabeth Renuart (Contact Author)
Albany Law School ( email )
80 New Scotland Avenue
Albany, NY 12208
United States
Feedback to SSRN


Paper statistics
Abstract Views: 701
Downloads: 140
Download Rank: 122,027
References:  125
Citations:  7

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.297 seconds