The Impact of the Anti-Predatory Lending Laws on Mortgage Volume

• Main Author: CHOI, Hyun Soo
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2012
• Subjects: Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/3280; https://ink.library.smu.edu.sg/context/lkcsb_research/article/4279/viewcontent/Choi_20HyunSoo.pdf
• Institution: Singapore Management University

In this paper, I test the hypothesis that anti-predatory lending laws inhibited the volume of mortgage lending during the housing-bubble period. I use cross-state variation in the strictness of these laws and their application only to mortgage refinancing as opposed to home purchases to develop a difference-in-difference estimate of the impact of these laws on mortgage volume. Consistent with my hypothesis, I find that states with stricter laws had lower mortgage refinancing volume but exhibited no difference in home purchase mortgage volume. I also test whether by restricting mortgage refinancing, these laws impacted household expenditures and find that the laws reduced household expenditures.