Banking Law

Consumer Bureau Considers Lawsuit Protection for Lenders in Some Foreclosure Suits


The new Consumer Financial Protection Bureau is considering rules that would give lenders protection from some lawsuits contesting foreclosures.

The safe harbor rule would apply when lenders make certain high-quality loans, the Wall Street Journal (sub. req.) reports. Loans qualifying for protection may be those in which the borrower’s total debt is below a cap, based on a percentage of the borrower’s income, unidentified sources tell the newspaper.

Loans with higher interest rates that nonetheless meet the debt cap would receive less protection from lawsuits, the story says. In those cases, borrowers could allege the lender should have known they couldn’t make the mortgage payments.

The aim is to encourage mortgage loans to well-qualified borrowers, according to the story.

Michael Calhoun, president of the Center for Responsible Lending, told the Wall Street Journal the idea has merit. The approach “has the potential to both encourage safe loans and increase scrutiny of risky subprime loans,” he said.

Previous:
Mass. Inmates Get Bond at Special Court Call, Boston Mayor Seeks $15M Over Crime Lab Test Issues

Next:
Citing First Amendment, Federal Judge Tosses Bias Suit over 'Bachelor' Casting


We welcome your comments, but please adhere to our comment policy. Flag comment for moderator.

Commenting is not available in this channel entry.