Forward to states in the vanguard: protecting consumers during the financial crisis.

• Author: Engel, Kathleen C.
• Position: CONSUMER LAW SYMPOSIUM

In July 2010, Congress passed the Dodd-Frank Wall Street Reform and consumer Protection act, (2) which fills many of the gaps in mortgage regulation that brought the United States economy to its knees. This new law and the debates leading up to it grabbed the headlines for several years. What is less well known is the critical role that states and local communities have played in attempting to chill risky lending and address the fallout from home foreclosures.

States have been enacting anti-predatory lending laws since the 1990s, many of which ultimately served as models for the Dodd-Frank Act. In parallel moves, state attorneys general have been enforcing discrimination and consumer protection laws against abusive lenders. And, as the subprime crisis has morphed into a foreclosure crisis, states have adopted tools to keep people in their homes.

In April 2010, Suffolk University Law School and the National Consumer Law Center sponsored a conference, States in the Vanguard: Protecting Consumers during the Financial Crisis, which was devoted to understanding state actions to protect consumers. This issue of the Suffolk University Law Review grew out of the States in the Vanguard conference and includes papers presented at the conference as well as articles that the Law Review independently solicited.

The articles cover topics ranging from predatory lending to housing code enforcement, but two consistent themes pervade: the problem of too little credit and the foreclosure crisis. For years, academics, policymakers, and activists who work on consumer protection issues focused on the terms and practices associated with risky and costly loans secured by borrowers' homes. More recently, their focus has shifted from abusive home mortgage lending to concerns about foreclosures as the spillover effect of the financial crisis has caused an escalation in mortgage defaults. At the same time, market actors have responded to high default rates and concerns about the valuation of mortgage-backed securities by restricting credit. The consequence has been a dramatic shift in the availability of credit; a scarcity of credit has replaced the glut of credit. Now, many people find it difficult to purchase homes or refinance mortgage loans.

1. TENSION: CREDIT REGULATION AND CREDIT AVAILABILITY

   Jim Carr and Katherine Lucas-Smith's piece, Five Realities about the Current Financial and Economic Crises, approaches credit availability from several angles. The authors...