Home ownership has been the primary means for most American families to build and pass on inter-generational wealth. However, government-sanctioned racial discrimination in housing and mortgage finance markets robbed many families of this opportunity, and today’s racial homeownership gap is barely changed from the levels of more than 50 years ago. Closing the homeownership gap is essential to closing the racial wealth gap. Additionally, predatory mortgage lending practices drained trillions in wealth from families, especially Black, Latino, low wealth and low-income Americans. CRL successfully advocated for the Dodd-Frank Wall Street Reform and Consumer Protection Act, which has made the mortgage market far safer for consumers. CRL is building on this progress by working to ensure that all credit-worthy borrowers have access to fair, affordable, and sustainable mortgages. And that policy makers and market participants develop solutions that are appropriate to respond to the scale of this housing crisis.
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Brief: Owners, Lenders Flourish Under State Anti-Predatory Lending Laws
The Center for Responsible Lending has released the most comprehensive study ever conducted on state laws aimed against predatory lending. "The Best Value in the Subprime Market: State Predatory Lending Reforms" shows that state laws are working well for credit-strapped families in the subprime market and for responsible lenders. With strong state laws, homeowners get these advantages: Stronger protections with...
The Costs of Subprime Prepayment Penalties: A Response to "Call Protection in Mortgage Contracts"
In a new working paper "Call Protection in Mortgage Contracts" Michael LaCour-Little concludes that prepayment penalties reduce the cost of credit to borrowers. However, there are several shortcomings in his analysis: inadequate data, inconsistent results, and neglect of the negative effects of prepayment penalties.
The Best Value in the Subprime Market: State Predatory Lending Reforms
To find a model for national legislation, many lawmakers need look no further than their own backyards. People who live in states with strong laws against predatory lending are more likely to get responsible mortgages at a lower cost. Our findings show that state laws enacted to prevent predatory mortgage lending work as intended to reduce abusive loan terms without...
Predatory Mortgages in Maine: Recent Trends and the Persistence of Abusive Lending Practices in the Subprime Mortgage Market
This report is the first systematic investigation of the nature and extent of predatory lending in Maine. Based on research conducted during July and August 2005, we examine Maine's subprime mortgage market and determine the extent and impact of predatory lending in the state between 2000 and 2005. In this research we draw on a number of sources, including available...
Minimal Broker Licensing Standards Will Not Affect Abusive Lending Practices
On September 29, the House Committee on Financial Services will hold a hearing focused on mortgage brokers ("Licensing and Registration in the Mortgage Industry"). The Ney-Kanjorski bill (H.R. 1295) -- Title V -- attempts to address mortgage broker abuses by requiring states to pass uniform broker licensing requirements. Title V ignores the most serious and common abuses by mortgage brokers...
Minority Families Pay More: HMDA Stats Show Disturbing Disparities
On September 13, 2005, the Federal Reserve released Home Mortgage Disclosure Act statistics on mortgage lending showing once again that African-Americans and Latinos pay more for home loans than comparable white borrowers. Lenders claim that weaker credit records explain the disparities, but the industry opposed collecting any information in the HMDA data that would shed light on borrowers' creditworthiness. Only...
Comment on Federal Reserve Analysis of Home Mortgage Disclosure Act Data
For the first time in 2004, lenders were required to report information to the federal government concerning the annual percentage rate (APR) charged borrowers on higher-cost home loans. The same data, collected under the requirements of the Home Mortgage Disclosure Act (HMDA), also detail several aspects of the loan transaction and the identity of the borrower, including race, ethnicity, sex...
Strong Compliance Systems Support Profitable Lending While Reducing Predatory Practices
The cost of compliance is a small percentage of mortgage lending expenses. We estimate that the use of automated systems lowers predatory lending law compliance costs to about one dollar per loan. Strong compliance also may reduce lenders' expenses by lowering the incidence of time-consuming and expensive foreclosures. Most important, the cost of complying with state laws is dwarfed by...