Atlantic Economic Journal, Vol. 40, p. 273, 2012
51 Pages Posted: 26 Aug 2009 Last revised: 24 Oct 2012
Date Written: May 12, 2009
Mounting foreclosures and recent disclosures of abusive lending practices have led many states to adopt new anti-predatory lending laws. Researchers have examined the impact of such laws on credit flows and the cost of credit. This research extends the literature by examining if the market responded to these laws by substituting different mortgage products for those restricted by anti-predatory lending provisions. The evidence indicates that the new laws were effective in restricting loans with targeted characteristics and that the market substituted other product types to maintain affordability in the face of these restrictions.
Keywords: Real estate, mortgages, housing, abusive lending, predatory lending, mortgage products, product substitution, adjustment to prohibition
JEL Classification: G21, K29
Suggested Citation: Suggested Citation
Bostic, Raphael W. and Chomsisengphet, Souphala and Engel, Kathleen C. and McCoy, Patricia A. and Pennington-Cross, Anthony and Wachter, Susan M., Mortgage Product Substitution and State Anti-Predatory Lending Laws: Better Loans and Better Borrowers? (May 12, 2009). U of Penn, Inst for Law & Econ Research Paper No. 09-27; Atlantic Economic Journal, Vol. 40, p. 273, 2012; U of Penn, Inst for Law & Econ Research Paper No. 09-27; Suffolk University Law School Research Paper No. 09-44. Available at SSRN: https://ssrn.com/abstract=1460871 or http://dx.doi.org/10.2139/ssrn.1460871