Do Predatory Lending Laws Influence Mortgage Lending? An Analysis of the North Carolina Predatory Lending Law
In this paper, we examine the effect of the 1999 North Carolina predatory lending law on mortgage activity in that state as compared to other states in the Southeastern United States. Using 1998--2000 Home Mortgage Disclosure Act (HMDA) data, we find that the North Carolina law reduced the overall level of subprime mortgage lending activity. Furthermore, we find that the North Carolina decline was caused by a decline in loan application volume and not by a change in loan denial rates, suggesting less aggressive marketing in that state after the imposition of the law. Finally, the impact of the legislation was different by both the type of financial service provider and borrower. Specifically, non-bank subprime lending contracted faster in North Carolina when compared to the control group, while both minority and low-income applicants were also less likely to get loans following the legislation. These results have wide ranging policy implications given that several predatory lending proposals are currently before Congress, as well as proposed in almost forty other states.
When requesting a correction, please mention this item's handle: RePEc:kap:jrefec:v:29:y:2004:i:4:p:435-456. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.