Does mortgage deregulation increase foreclosures? Evidence from Cleveland

Yilan Xu ()

Regional Science and Urban Economics, 2014, vol. 46, issue C, 126-139

Abstract: This paper examines how relaxing a local anti-predatory lending law for mortgages affects foreclosures. The empirical evidence is drawn from a quasi experiment in Cleveland, Ohio, where the State Supreme Court repealed an ordinance that imposed lending restrictions on home mortgages of high annual percentage rates (APRs). Empirical evidence shows that observable loan and borrower characteristics were not affected by the repeal, nor did the overall originations appear to increase; yet the APRs were 20% more likely to exceed the regulatory thresholds that were nullified. Moreover, the foreclosure rate increased by six percentage points to 20%.

Keywords: Mortgage regulation; Home foreclosures; Consumer financial protection; Predatory lending (search for similar items in EconPapers)
JEL-codes: D12 D18 G21 G28 K39 R10 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:46:y:2014:i:c:p:126-139

DOI: 10.1016/j.regsciurbeco.2014.03.003

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