The findings come from a panel convened by Attorney General Lori Swanson and chaired by Prentiss Cox, professor at the University of Minnesota Law School. The suggestions to add criminal penalties on top of already-available civil ones is a result of the startling rise in foreclosures we have been reporting on at length.
The possible problem with the criminal sanctions is that many police departments lack the expertise to prosecute such claims, particularly because they involve so many thorny legal issues. The Attorney General only prosecutes “big” cases as a general rule, and so this will likely provide little deterrence to small-time predatory lenders. However, any additional remedies for consumers is a welcome change.
The panel also suggested:
- that refinancing without benefit to the buyer and negative-amortization loans be curbed;
- outlawing waivers of fiduciary duty for loan brokers;
- a state ban on mortgage prepayment penalties; and
- new legal rights to recover damages in court
Most seem fairly consumer-friendly. The first may be a bit nanny-ish, but when you have such vast discrepancies in financial understanding as exist between a broker and borrower, perhaps some nannying could be a good thing.