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New York Times Calls for Revamp of Federal Banking Laws in Response to Mortgage Foreclosure Crisis

April 20, 2009

In an editorial published March 7, the New York Times called for substantial changes in federal banking regulations. Most notably, the Times suggested a repeal of a 2004 decision by federal regulators that federal regulations pre-empt state laws for nationally chartered banks. As a result, those banks were freed from complying with state predatory lending laws stricter than their federal counterparts. The Times noted that the worst of the subprime and nontraditional loans" were issued in 2006 and 2007, after this decision. Banking law experts have already called for a repeal of the pre-emption decision.

The Times goes on to say that no part of the mortgage lending chain is blameless in the mortgage lending crisis, something we've certainly seen as Fountain Valley predatory mortgage lending attorneys. Rather than put all of the blame on homeowners, the editorial said, observers should understand that this is a systemic problem with the financial industry. Looking for a quick profit, lenders, mortgage brokers, appraisers and others colluded to sell people homes they couldn't really afford or set up situations requiring endless refinancing. In many cases, this led to outright deceptive lending -- something that tighter state laws could have prevented, at least in their own states.

Conservatives may be surprised to see the Times taking what could be described as a states' rights position, but as Orange predatory mortgage lending lawyers, we applaud. Events in the past several years have made it clear that federal law is insufficient to protect trusting people from mortgage fraud. Here in California, state consumer protection laws are generally stricter than their federal counterparts. If the federal government can't or won't strengthen its laws to catch up, we support using stricter state laws to ban unfair loan structures or lending practices.

Fortunately for victims, they may still sue over violations of federal and state lending fraud laws whenever they can show those laws have been violated. The Tustin predatory mortgage lending attorneys at Howard Law LLP represent clients like these in lawsuits over violations of the Truth in Lending Act, the Homeownership and Equity Protection Act and other laws. In many cases, we are able to stop foreclosure, have a predatory loan declared void or adjust our clients' payments to levels they can afford. If you're having trouble paying your mortgage and you believe you were lied to when you refinanced or bought your home, we can help. Contact Howard Law today to learn more at a free, confidential consultation on your case.