CFPB Bans Arbitration Clauses in Certain Loan Agreements
The Consumer Financial Protection Bureau (“CFPB”) implemented a rule, effective June 1, 2013, that prohibits mandatory arbitration clauses in residential mortgage loans or home equity lines of credit. Such loans cannot contain “terms that require arbitration or any other non-judicial procedure to resolve any controversy or settle any controversy or settle any claims arising out of the transaction,” because consumers may not permissibly be barred from filing suit in court for a violation of federal law. The arbitration clause ban is contained in final rules from the CFPB that amended the Truth in Lending Act and implemented key provisions of the Dodd-Frank Act.
Further regulation on mandatory arbitration clauses in other consumer financial contracts could be on the horizon. The CFPB is authorized by the Dodd-Frank Act to conduct a study of mandatory arbitration provisions in financial instruments and service agreements and to prohibit or impose conditions or limitations on mandatory arbitration if its study supports any such limitations or prohibition.Share This
The law firm you choose makes a difference. If you are the victim of an accident or an illness that someone else caused, the North Carolina personal injury law firm of Martin & Jones has the depth of experience, skills and sensitivity to make your road to recovery as smooth as possible. Whether you have experience with the legal system or have never hired a medical malpractice or personal injury lawyer before, our attorneys and staff will do our best to answer your questions, provide clear advice and prepare you and your family for what to expect. If you would like more information or to meet with one of our attorneys, please fill out the form below or call us at 800.662.1234.