Regulation of subprime mortgage products: An analysis of North Carolina's predatory lending law

Gregory Elliehausen, Michael E Staten

Research output: Contribution to journalArticle

22 Citations (Scopus)

Abstract

This paper estimates the effect of North Carolina's high-cost mortgage law on the subprime mortgage market in that state. The results indicate that creditors sharply restricted lending to higher risk consumers in North Carolina following passage of the law. Creditors did not restrict lending in neighboring states or to lower risk consumers in North Carolina. These results suggest that the restriction in North Carolina was due to rationing in response to higher costs imposed by the law. The findings of this study are of importance beyond North Carolina. Other states and municipalities have proposed or passed similar or more restrictive laws. These laws risk taking back some of the gains in credit availability that lower income and higher risk consumers gained in the 1990s.

Original languageEnglish (US)
Pages (from-to)411-433
Number of pages23
JournalJournal of Real Estate Finance and Economics
Volume29
Issue number4
DOIs
StatePublished - Dec 2004
Externally publishedYes

Fingerprint

lending
regulation
Law
creditor
cost
rationing
costs
income
municipality
credit
low income
market
product
analysis
Subprime mortgages
Predatory lending
Consumer risk
Costs
Lending

Keywords

  • predatory lending
  • regulation
  • subprime mortgage lending

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics
  • Urban Studies

Cite this

Regulation of subprime mortgage products : An analysis of North Carolina's predatory lending law. / Elliehausen, Gregory; Staten, Michael E.

In: Journal of Real Estate Finance and Economics, Vol. 29, No. 4, 12.2004, p. 411-433.

Research output: Contribution to journalArticle

@article{1e61f3f6e1a34482baca4404cd3089d7,
title = "Regulation of subprime mortgage products: An analysis of North Carolina's predatory lending law",
abstract = "This paper estimates the effect of North Carolina's high-cost mortgage law on the subprime mortgage market in that state. The results indicate that creditors sharply restricted lending to higher risk consumers in North Carolina following passage of the law. Creditors did not restrict lending in neighboring states or to lower risk consumers in North Carolina. These results suggest that the restriction in North Carolina was due to rationing in response to higher costs imposed by the law. The findings of this study are of importance beyond North Carolina. Other states and municipalities have proposed or passed similar or more restrictive laws. These laws risk taking back some of the gains in credit availability that lower income and higher risk consumers gained in the 1990s.",
keywords = "predatory lending, regulation, subprime mortgage lending",
author = "Gregory Elliehausen and Staten, {Michael E}",
year = "2004",
month = "12",
doi = "10.1023/B:REAL.0000044021.07237.42",
language = "English (US)",
volume = "29",
pages = "411--433",
journal = "Journal of Real Estate Finance and Economics",
issn = "0895-5638",
publisher = "Springer Netherlands",
number = "4",

}

TY - JOUR

T1 - Regulation of subprime mortgage products

T2 - An analysis of North Carolina's predatory lending law

AU - Elliehausen, Gregory

AU - Staten, Michael E

PY - 2004/12

Y1 - 2004/12

N2 - This paper estimates the effect of North Carolina's high-cost mortgage law on the subprime mortgage market in that state. The results indicate that creditors sharply restricted lending to higher risk consumers in North Carolina following passage of the law. Creditors did not restrict lending in neighboring states or to lower risk consumers in North Carolina. These results suggest that the restriction in North Carolina was due to rationing in response to higher costs imposed by the law. The findings of this study are of importance beyond North Carolina. Other states and municipalities have proposed or passed similar or more restrictive laws. These laws risk taking back some of the gains in credit availability that lower income and higher risk consumers gained in the 1990s.

AB - This paper estimates the effect of North Carolina's high-cost mortgage law on the subprime mortgage market in that state. The results indicate that creditors sharply restricted lending to higher risk consumers in North Carolina following passage of the law. Creditors did not restrict lending in neighboring states or to lower risk consumers in North Carolina. These results suggest that the restriction in North Carolina was due to rationing in response to higher costs imposed by the law. The findings of this study are of importance beyond North Carolina. Other states and municipalities have proposed or passed similar or more restrictive laws. These laws risk taking back some of the gains in credit availability that lower income and higher risk consumers gained in the 1990s.

KW - predatory lending

KW - regulation

KW - subprime mortgage lending

UR - http://www.scopus.com/inward/record.url?scp=5444263861&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=5444263861&partnerID=8YFLogxK

U2 - 10.1023/B:REAL.0000044021.07237.42

DO - 10.1023/B:REAL.0000044021.07237.42

M3 - Article

AN - SCOPUS:5444263861

VL - 29

SP - 411

EP - 433

JO - Journal of Real Estate Finance and Economics

JF - Journal of Real Estate Finance and Economics

SN - 0895-5638

IS - 4

ER -