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An Overview of the Predatory Lending Process
Risk-Based Mortgage Pricing: Present and Future Research
Subprime Lending: An Investigation of Economic Efficiency
Assessing the Impact of North Carolina's Predatory Lending Law
Neighborhood Patterns of Subprime Lending: Evidence from Disparate Cities
Has Mortgage Capital Found an Inner-City Spatial Fix?
The Geography of Subprime Mortgage Prepayment Penalty Patterns
Predatory Lending: What Does Wall Street Have to Do with It?
Limiting Abuse and Opportunism by Mortgage Servicers
The Demand Side of Financial Exploitation: The Case of Medical Debt
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Predatory Lending: What Does Wall Street Have to Do with It?
Volume 15, Issue 3
2004
 
Kathleen C. Engel and Patricia A. McCoy
 
In this article, we examine the contention that the secondary market will exert sufficient market discipline to drive predatory home loan lenders from the subprime marketplace. Using a so-called lemons model, we identify the potential risks that investors encounter if they buy securities backed by predatory home loans. We then explain how structured finance, deal provisions, pricing mechanisms, and legal protections shield investors from much of the risk that those loans entail.
 
While the secondary market does impose some discipline on the subprime home loan market, it is not enough to bring predatory lending to a halt. We provide rationales for imposing liability on the assignees of predatory loans and describe the parameters of our proposed assignee liability legislation.
 
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