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Robo-Lobbying: Why Both Sides of the Mandatory Arbitration Clause Issue Are Actually Arguing Each Other’s Position

Robo-Lobbying:  Why Both Sides of the Mandatory Arbitration Clause Issue Are Actually Arguing Each Other’s Position

In your average political debate it is usually easy to predict which position a politician will take based on their party allegiance.  Sometimes there is break from party, but such action is ordinarily premeditated.  In what can only be described as a “comedy of errors” the recent debate, and congressional vote, inexplicably has everyone voting the wrong position.

Those that believe that they are advocating for financial institutions and creditors were successful in striking down the CFPB Rule that would prevent creditors from “forcing” arbitration on consumers.  The proponents of the CFPB Rule are operating under the belief that arbitration is detrimental to consumers.

Somewhere along the line the forest seems to have been lost for the trees.  In 2014 the American Arbitration Association changed its rules to make arbitration less expensive and more attractive to consumers.  Conversely arbitration became more expensive and less attractive for creditors.  Creditors began fleeing from arbitration en masse.

The CFPB Rule was struck down by Congress because the measure was believed to be too extreme.  Many Senators and Representatives felt that there was more conciliatory language that could have been implemented in the Rule.  The loss in Congress now means that the President will have the opportunity to eliminate the Rule.  It doesn’t mean that the CFPB won’t try again.

With the loss there are some that are concerned that the American Arbitration Association might revert back to its original formula, requiring consumers and creditors to pay an equal share in arbitration.  Such a reversion, however, would likely be seen as evidence of complicity in an effort to deprive consumers of a fair adjudication of their claims.  It seems unlikely that the AAA would change the costs structure.  Equally unlikely is that creditors would want to compel arbitration when they would be required to pay $10,000 to $20,000 for the litigation (far more than any state court action would cost).

If the CFPB and Consumer Advocates truly wanted to help consumers then they should make it easier for consumers to compel these creditors to participate in arbitration.  Its half-time now, its time to regroup, for everyone to remember what jersey they’re wearing and get back to work!

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MARS DISCLAIMER If you are a homeowner/borrower and you have retained CASA to represent you in a matter related to your mortgage CASA may represent you in your arbitration with respect to claims against your creditor for violations of State and Federal Law. If, however, you wish to apply for loan modification or any other type of loss mitigation as a part of this representation an attorney that is licensed in your home state, or the state in which your property is located, must be assigned to your file. You will be required to sign a Mortgage Assistance Relief Services Addendum for the provision of these services. While there will be additional fees for these services, CASA will not bill you for these services unless and until you and your Servicer reach a resolution that is acceptable to you.