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Full-Text Articles in Business
State And Local Anti-Predatory Lending Laws: The Effect Of Legal Enforcement Mechanisms, Raphael Bostic, Kathleen Engel, Patricia Mccoy, Anthony Pennington-Cross, Susan Wachter
State And Local Anti-Predatory Lending Laws: The Effect Of Legal Enforcement Mechanisms, Raphael Bostic, Kathleen Engel, Patricia Mccoy, Anthony Pennington-Cross, Susan Wachter
Anthony Pennington-Cross
Subprime mortgage lending has grown rapidly in recent years and with it, so have concerns about predatory lending. In response to evidence of predatory lending, most states have enacted new laws or expanded existing laws to address abuses in the subprime home loan market. The effect of these statutes is a matter of debate. This paper seeks to improve the understanding of this increasingly important issue and pays particular attention to the role that legal enforcement mechanisms play in this context. The results of the analysis are consistent with the view that anti-predatory lending laws influence subprime lending markets and …
Subprime Refinancing: Equity Extraction And Mortgage Termination, Anthony Pennington-Cross, Souphala Chomsisengphet
Subprime Refinancing: Equity Extraction And Mortgage Termination, Anthony Pennington-Cross, Souphala Chomsisengphet
Anthony Pennington-Cross
This article examines the choice of borrowers to extract wealth from housing in the high-cost (subprime) segment of the mortgage market and assesses the prepayment and default performance of these cash-out refinance loans relative to the rate of refinance loans. Consistent with survey evidence, the propensity to extract equity is sensitive to the relative interest rates of other forms of consumer debt. After the loan is originated, results indicate that cash-out refinances perform differently from non-cash-out refinances. For example, cash-outs are less likely to default or prepay, and the termination of cash-outs is more sensitive to changing interest rates and …