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Reforming the Regulation of the Market for Home Loans

33 Pages Posted: 2 Mar 2011 Last revised: 10 Mar 2011

Susan Block-Lieb

Fordham University School of Law

Edward J. Janger

Brooklyn Law School

Date Written: March 1, 2011

Abstract

This article explores the content and institutional context for recently revised regulation of the markets for residential mortgages. It proposes a market-sensitive reading of the Wall Street Reform and Consumer Protection Act, and suggests that the Bureau of Consumer Financial Protection created under the Act should be understood to balance consumer protection with concerns for the liquidity and safety and soundness of the financial markets. In particular, it argues that the Act has the potential to create a regulatory architecture that protects both consumers and the capital markets by distinguishing between financial products that can safely be financed through the capital markets and those that pose greater risks, and should, by design, be more illiquid. This coordinated architecture can be implemented, we believe, by the new Bureau of Consumer Financial Protection through its related powers to prohibit unfair lending practices, promulgate safe harbor notices and implement certain minimum mortgage origination standards. However, the devil will be in the details - both substantive and institutional - and, in our view the new Bureau will have to flex its rulemaking muscle a bit to fully implement that vision.

Suggested Citation

Block-Lieb, Susan and Janger, Edward J., Reforming the Regulation of the Market for Home Loans (March 1, 2011). Fordham Law Legal Studies Research Paper No. 1763918; Brooklyn Law School, Legal Studies Paper No. 222. Available at SSRN: https://ssrn.com/abstract=1763918 or http://dx.doi.org/10.2139/ssrn.1763918

Susan Block-Lieb (Contact Author)

Fordham University School of Law ( email )

140 West 62nd Street
New York, NY 10023
United States
(212) 636-6782 (Phone)
(212) 636-6899 (Fax)

Edward J. Janger

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States
718-780-7995 (Phone)
718-780-0376 (Fax)

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