How significant a risk is noncompliance with consumer protection laws?
There is always risk, but that’s what companies like PissedConsumer are for, helping protect consumer rights, and lawyers.
The mortgage industry as a whole is struggling to comply with consumer protection laws. A remarkable report published by the inspector general for the FDIC reveals that during 2005 (which was the peak year of the mortgage boom measured by number of loans originated), 83% of federally supervised banks that made loans were cited for patterns of “significant compliance violations.” You can download the report from the FDIC website by clicking here or going to the FDIC website and retrieving Report No. 06-024. The percentage is presumably higher for state-licensed, non-depository lenders who were responsible for originating 52% of subprime mortgages and are subject to a much broader patchwork of state regulation. Violations of consumer protection laws, can result in rescission (effectively cancelling the loan), defense to foreclosure, fines, penalties and (both civil and criminal) damages that can exceed the original principal balance of the loan. There are also additional reputational ris
