Document Type
Article
Publication Date
1-2007
Source Publication
Federal Reserve Bank of St. Louis Review
Abstract
Federal, state, and local predatory lending laws are designed to restrict and in some cases prohibit certain types of high-cost mortgage credit in the subprime market. Empirical evidence using the spatial variation in these laws shows that the aggregate flow of high-cost mortgage credit can increase, decrease, or be unchanged after these laws are enacted. Although it may seem counterintuitive to find that a law that prohibits lending could be associated with more lending, it is hypothesized that a law may reduce the cost of sorting honest loans from dishonest loans and lessen borrowers’ fears of predation, thus stimulating the high-cost mortgage market.
pennington.busi.fedb.89-1.2007.exe (755 kB)
Data and Programs
Data and Programs
Comments
Originally published in Federal Reserve Bank of St. Louis Review, Volume 89, No. 1 (January/February 2007), online here.
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This article is the published version.