Debunking the CRA Myth – Again
Center researchers detail flaws in a paper seeking to discredit the Community Reinvestment Act and urge policymakers and practitioners to resist being distracted by this widely rejected thesis.
Center researchers detail flaws in a paper seeking to discredit the Community Reinvestment Act and urge policymakers and practitioners to resist being distracted by this widely rejected thesis.
Researchers examine loan modification practices in rustbelt and sand states, and neighborhoods differently affected by the foreclosure crisis and find that servicers modify loans less frequently where they are needed the most — in neighborhoods hardest hit by the crisis.
Federal preemption of state mortgage lending regulations may result in an increase in mortgage default risk, thus limiting consumer protection in the residential mortgage market.
Qualified Mortgage guidelines alone will curtail risky lending. Imposing additional risk criteria would needlessly shut out many borrowers, particularly low-income borrowers and borrowers of color.
Low-income home loan borrowers who obtain more sustainable, less risky, mortgage products exhibit significantly lower default risks.
A 2004 order by federal bank regulators that exempt national banks from tougher state anti-predatory lending laws led to more foreclosures and riskier lending among exempt lenders, researchers find.
Research suggests that strong state anti-predatory lending laws are an important tool for consumer protection and that state laws should not be overridden by federal preemption.
State anti-predatory laws provide an important safeguard against predatory mortgage lending.
The level of subprime lending in a census tract is found to be a significant predictor of the default and prepayment probability of the community reinvestment loans in the same neighborhoods, providing new evidence of the negative impact of concentrated subprime lending in certain neighborhoods.
Results of a descriptive analysis suggest that national banks and all lenders freed from following state anti-predatory lending laws following a federal preemption order may increased their risky subprime lending. But more analysis is needed to understand the effectiveness of state anti-predatory lending laws and the impact of federal preemption.