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The Regulation of Mortgage Servicing: Lessons from the Financial Crisis

Forthcoming in Contemporary Economic Policy

30 Pages Posted: 17 Oct 2017  

James E. McNulty

Florida Atlantic University

Luis Garcia-Feijoo

Florida Atlantic University

Ariel Viale

Palm Beach Atlantic University

Date Written: October 16, 2017

Abstract

Pivotal litigation against the largest subprime mortgage servicer in the US provides lessons about the appropriate regulation of mortgage servicing and adds to research about the causes of the financial crisis. Mortgage servicing is essential to the functioning of the financial system so servicers must be held to a high standard. The litigation revealed egregious practices but was settled quickly for a nominal amount and provided the servicer a very broad release of liability, allowing it to expand without correcting serious problems, and created significant wealth gains for the parent firm. Regulatory authority should not be split between agencies.

Suggested Citation

McNulty, James E. and Garcia-Feijoo, Luis and Viale, Ariel, The Regulation of Mortgage Servicing: Lessons from the Financial Crisis (October 16, 2017). Forthcoming in Contemporary Economic Policy. Available at SSRN: https://ssrn.com/abstract=3053916

James McNulty (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd.
Boca Raton, FL 33341
United States
(561) 297-2708 (Phone)

Luis Garcia-Feijoo

Florida Atlantic University ( email )

Boca Raton, FL 33431
United States

Ariel Viale

Palm Beach Atlantic University ( email )

West Palm Beach, FL 33401
United States

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