The New York Times editorializes today (Tuesday, November 6, 2007) that the Chairman of the House Financial Services Committee Barney Frank will introduce legislation that would preempt state consumer legislation across a broad category of fraudulent conduct that is even peripherally related to the mortgage foreclosure mess. The same issue reports on the front page (”Borrowers Face Dubious Charges in Foreclosures”) the extent to which the mortgage industry is defrauding the homeowners during the mortgage foreclosure process.
Some states grant consumers greater rights than others, however there are significant gaps in federal legislation that are corrected by state laws. For example, the federal Consumer Protection Act allows for only administrative remedies with limited damages while many states allow for civil law suits for unfair and deceptive practices which offer much greater chances for significant relief. The federal Fair Debt Collection Practices Act allows suit against the collection agencies but no suit against the creditors who instigate the unfair practices and no suits against collectors if they are an affiliate of the creditor. Similarly the Fair Credit Reporting Act, allows suit against the credit reporting agencies who don’t correct erroneous information but not against the creditors who make erroneous reports.