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View Diary: Predatory Lending doesn't have to be Bankruptcy sequel (80 comments)

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  •  Overspun. (none)
    The claim that bad laws have made "the mortgage market evaporate" might be a bit of an exaggeration. The primary bases for such assertions have been discredited. The predators left for friendlier states, but that does not mean that one can't get a mortgage in those states.

    In principle your imprecation for a single national standard makes sense, but only if that standard is good. But right now our pathetic ramparts against a nationally organized political corruption of  banking regulation are pockets of state regulation.

    •  A little overspun, I admit (none)
      but not by much.  When the Georgia Fair Lending Act (one of the strictest anti-predatory lending laws in the country) first passed, the threat of uncapped assignee liability, coupled with certain ambiguities in the law, caused virtually everybody to stop buying any mortgages originated in Georgia.  This quite literally caused a meltdown in the Georgia mortgage markets.  Since lenders couldn't sell their loans, they couldn't get money to make new ones.  It forced the Georgia legislature to amend the law.  The law is still very strict, but at least the crisis was averted.  There are several other laws around the country that are causing similar problems.  Some are so poorly drafted that nobody knows how to comply with them.  I think the only solution is a strong national standard.  And I agree with you that HOEPA, the current federal law, needs to be strengthened if that's going to work.  

      I think that the bill proposed by Representative Miller does all the right things in terms of enhancing the consumer protection provisions of HOEPA.  If it also included federal preemption, I think it would be a very effective bill, and maybe even politically feasible.

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