Di Lorenzo on Real Estate Financing

Professor Vincent Di Lorenzo has contributed a chapter to a book, Community, Home and, Identity,that is edited by Michael Diamond of Georgetown and Terry Turnipseed of Syracuse and is being published by Ashgate. The chapter written by Vincent Di Lorenzo is “Evolving Ethical Standards in Property Law: A Study of Regulatory Perspectives toward Home Mortgage Lending Transactions.” Here is the abstract:

This chapter examines the ethical viewpoint of Congress and the federal bank regulatory agencies toward consumer protection in the mortgage market. On one level this is an analysis of whether regulators have properly effectuated the intention of Congress. On another level it is an exploration of the ethical perspective manifest in congressional decisions. The conclusion drawn is that over the last thirty years Congress repeatedly prohibited mortgage practices and products that subjected consumers to significant financial injury (loss) when it found that consumers were unable to effectively protect themselves against such injury.  This reflected an ethical viewpoint in U.S. society, namely that business entities should not profit by inflicting significant financial injury on vulnerable individuals.  Such a viewpoint, and justification for legal intervention, mirrors the viewpoint and the justification for embrace of consumer protections in residential landlord-tenant transactions (warranty of habitability) and in some residential real estate transactions (warranty of quality). As a result of this ethical viewpoint U.S. law has, to a significant degree, rejected caveat emptor as a governing principle in consumer oriented real estate transactions. Much has been written of this change in landlord-tenant law, and in the law governing sales of new homes. This chapter documents the same change has occurred in real estate financing, the third major type of real estate transaction that consumers encounter.

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