Anti-predatory lending laws enacted by some states in the past decade to protect consumers from abusive and unfair mortgage practices saved many people from losing their homes during the foreclosure crisis, according to new research findings from the UNC Center for Community Capital.
But their impact was undermined by the action of federal regulators who preempted state laws in 2004, exempting national banks from the tougher state laws. As a result of preemption, foreclosures and riskier lending increased significantly among the exempt lenders, the center’s research shows.
Results from two companion center reports offer the first comprehensive look at loan quality and performance following the 2004 preemption by the Office of the Comptroller of the Current in states with and without strong anti-predatory lending laws.
The APL Effect: The Impacts of State Anti-Predatory Lending Laws on Foreclosures
Examines the quality of loans from both the loan level and neighborhood level in states with and without anti-predatory lending laws
(PDF 1.09 MB)
The Preemption Effect:
The Impact of Federal Preemption of State Anti-Predatory Lending Laws on the Foreclosure Crisis
News StoryFederal action to exempt national banks from state consumer protection laws caused more foreclosures and riskier lending, UNC study shows
OpinionStrong State Controls Critical to Strengthening U.S. Financial System
By Robert G. Quercia, director, UNC Center for Community Capital
Wayne State University Department of Urban Studies
Roberto G. Quercia
UNC Center for Community Capital
Carolina K. Reid, Ph.D.
Manager, Research Group
Federal Reserve Bank of San Francisco
Assistant Professor of Law
Valparaiso University School of Law
Read more of the center’s research and analysis on mortgage finance and homeownership
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