It used to be that mortgage lending was mostly about credit risk. Successful lenders were those who knew how to manage, understand and quantify credit risk. They would follow the best credit policies to offset the reasonable risks posed by qualified borrowers. Then they would further offset that risk with solid collateral--as an added backstop.
Somehow that seems a quaint concept today, when credit risk is only a tiny part of the equation. In today's mortgage business, litigation and enforcement risk represents a multibillion-dollar liability trap for lenders. Today's biggest risk for lenders is no longer credit risk. It's a largely hostile regulatory and enforcement environment. And it's making many mortgage executives rethink their exposure to the business.
In this issue, we look at the enforcement record of the Consumer Financial Protection Bureau (CFPB). In our cover story, "On the Hook" by Jon Eisenberg, a partner with K&L Gates law firm, the author looks at the personal risk faced by individuals in the 12 enforcement proceedings to date where owners or executives were named as personally liable parties. The author isolates key lessons to be drawn from how the CFPB targets individuals as culpable parties.
This month, we also examine the legal exposure for mortgage lenders that stems from the CFPB's Qualified Mortgage and ability-to-repay rules. The article is by...