Research

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.

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...

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...

Public Chapter 440 of the Acts of 2005 significantly amends the Tennessee Title Pledge Act ("Act"), set forth in Title 45, Chapter 15, regarding the operation and regulation of the title pledge industry. Specifically, Public Chapter 440 subjects the title pledge industry to licensing and examination by the Department of Financial Institutions ("Department"). Read CRL's summary of the report >

The fear of overwhelming credit card debt is driving many Americans to hand their equity back to mortgage lenders in the form of "cash-out" refinances. Rather than generating cash to invest in the family's future or cover short term emergencies, cash-out refinances frequently serve as equity-draining transactions that only repay ("consolidate") short-term debts, such as credit card balances. Worse, the...

The rapid rise in debt among American households over the last decade is well documented, but it is not well understood. Prior to the survey findings presented in this paper, there have been no data available to study how many American households are using credit cards and how they are managing their debt. To answer these questions, Demos, along with...

The Center for Responsible Lending has released an analysis of payday lending industry data, which estimates that: Active-duty military personnel are 3 times more likely than civilians to have taken out a payday loan One in five active-duty military personnel were payday borrowers last year. Predatory payday lending costs military families over $80 million in abusive fees every year. The...

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...

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...

Overdraft lending: the problem Our nation's major banks and credit unions are making unsolicited, high-cost loans to their checking account holders when their account balance dips below zero, generating enormous fees for the banks and frequently driving their customers deeper into the negative. Financial institutions never have to reveal that customers pay triple- and quadruple-digit interest rates. They make overdraft...