Predatory Lending and Preemption LegislationResearch funded by National State Attorneys General Program
Two companion reports examine the effect of the federal government’s preemption of state anti-predatory lending legislation for national banks in 2004.
Anti-predatory lending laws enacted by some states in the past decade to protect consumers from abusive and unfair mortgage practices saved many people from losing their homes during the foreclosure crisis. But their impact was undermined by the action of federal regulators who preempted state laws in 2004, exempting national banks from the tougher state laws. As a result of preemption, foreclosures and riskier lending increased significantly among the exempt lenders, center research shows.
Results from two companion center reports offer the first comprehensive look at loan quality and performance following the 2004 preemption by the Office of the Comptroller of the Current in states with and without strong anti-predatory lending laws.
- The APL Effect: The Impacts of State Anti-Predatory Lending Laws on Foreclosures examines the quality of loans from both the loan level and neighborhood level in states with and without anti-predatory lending laws.
- The Preemption Effect: The Impact of Federal Preemption of State Anti-Predatory Lending Laws on the Foreclosure analyzes data from 2.5 million mortgages before and after federal preemption in states with and without anti-predatory lending laws, controlling for other factors to isolate the impact of preemption.
Journal of Policy Analysis and Management
Cornell Journal of Law and Public Policy
Center for Community Capital executive director discusses ways to prevent financial abuses with national attorneys general
Federal action to exempt national banks from state consumer protection laws caused more foreclosures and riskier lending, UNC study shows