99 Pages Posted: 30 Jan 2006
In the past two decades the American home mortgage lending market has seen the development of controversial loans which consumer advocates, federal regulators, as well as many lenders have come to call "predatory." Critics of these businesses complain that lenders make loans borrowers cannot repay in anticipation of foreclosing on the family home. Responding to the complaints of their constituents, dozens of state legislatures and local governments have passed statutes and ordinances attempting to prohibit unfair contractual terms. At the same time federal banking regulators have moved to preempt these state laws, placing state and federal leaders on a collision course. Moreover, Congress is actively considering the elimination of all state mortgage lending regulations. This article reviews predatory lending contractual terms; discusses current and past social policy focusing on the American tradition of combined federal and state regulation; and, explores potential unintended consequences from federal preemption of state law. Finally, it suggests current efforts to preempt state and local predatory lending law have more to do with a deregulatory agenda than with regulating commercial activity at the most efficient level of government.
Keywords: federalism, predatory, lending, loan, consumer, credit, debt, mortgage, preemption
Suggested Citation: Suggested Citation
Peterson, Christopher Lewis, Federalism and Predatory Lending: Unmasking the Deregulatory Agenda. Temple Law Review, Vol. 78, pp. 1-98, Spring 2005. Available at SSRN: https://ssrn.com/abstract=878802
Over-Indebtedness, Predatory Lending, and the International Political Economy of Residential Home Mortgage Securitization: Comparing the United States' Subprime Home Mortgage Lending Crisis to Home Finance in the United Kingdom, Germany, and Japan