The impact of local predatory lending laws on the flow of subprime credit

Ho, Giang; Pennington‐Cross, Anthony

doi:10.1016/j.jue.2006.02.005

Cited by 65 publications

(12 citation statements)

References 17 publications

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“…In addition, these states tend to have relatively modest restrictions on allowable lending. In particular, four of these five states have 14 Prior research has also found this mixed reaction in the market to the introduction of regulations of high-cost mortgage lending Pennington-Cross, 2006, andLi andErnst, 2006). no provision regarding mandatory arbitration relief.…”

Section: Discussionmentioning

confidence: 99%

The Varying Effects of Predatory Lending Laws on High-Cost Mortgage Applications

Ho¹,

Pennington‐Cross²

2007

ICPSR Data Holdings

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Section: Discussionmentioning

confidence: 99%

The Varying Effects of Predatory Lending Laws on High-Cost Mortgage Applications

Ho¹,

Pennington‐Cross²

2007

ICPSR Data Holdings

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“…Loan applicants in jurisdictions lacking mortgage information disclosures may perceive greater risks of receiving bad loan offers and decide not to enter the market at all—an example of Akerlof's lemons problem (Akerlof ). Previous studies suggest that state mortgage regulations may encourage more or different types of borrowers to enter the mortgage market, although the effects are neither strong nor consistent (Bocian, Ernst, and Li ; Harvey and Nigro ; Ho and Pennington‐Cross ). There also remains the possibility the laws examined in this study are correlated with other unobserved statewide factors.…”

Section: Discussionmentioning

confidence: 97%

Protecting Mortgage Borrowers through Risk Awareness: Evidence from Variations in State Laws

Collins¹

2014

Journal of Consumer Affairs

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In the wake of historic levels of mortgage defaults, regulators have debated how to regulate certain high‐risk loans because of the risks of foreclosure involved. This study examines state laws that required loan applicants to receive information about the risks of foreclosure before they could sign certain mortgage contracts. Skeptics suggest that disclosures are largely ignored by consumers, yet controlling for other factors this study shows that loan applicants in states with enhanced warnings about foreclosures were more likely to reject high‐cost refinance mortgage loan offers from a lender. Enhanced disclosures with features such as risk warnings, signatures, and referrals to counseling are being implemented as part of Dodd–Frank consumer finance reforms. This study suggests these strategies may be useful to balance consumer protection and access to high‐risk credit.

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“…With regards to the policy implications, if delinquency results from excessive spending, it would suggest a failure of the pre-contractual regulatory mechanism thereby incentivizing irresponsible lending practices (Ho & Pennington-Cross, 2006;Stoop, 2009;Campbell et al, 2011).…”

Section: Excessive Consumptionmentioning

confidence: 99%