Contracts were partly to blame for the housing bubble, and lawyers will have to be involved in cleaning the mess, Federal Reserve Board governor Sarah Bloom Raskin told law professionals in Maryland Tuesday.

Lawyers have to redefine the terms of mortgage contracts to more equally realign the burdens and incentives between buyers, lenders and third parties.

“If the contracts today are not working — and the evidence seems clear to me that, along some dimensions, they are not — we as lawyers should be working on ways to improve them,” she said. “Without such improvements you may not be serving your clients, and from the perspective of the macroeconomy, none of us will be contributing to a reconstruction of the legal framework in the crucial context of mortgage finance.”

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.