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THE REGULATION OF MORTGAGE SERVICING: LESSONS FROM THE FINANCIAL CRISIS
Author(s) -
McNulty James E.,
GarciaFeijoo Luis,
Viale Ariel
Publication year - 2019
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12272
Subject(s) - subprime mortgage crisis , financial crisis , liability , finance , business , financial system , mortgage insurance , shared appreciation mortgage , economics , macroeconomics , casualty insurance , insurance policy
Pivotal litigation against the largest subprime mortgage servicer in the United States 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. ( JEL G28, G21, K40)