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High loan-to-value mortgage lending is a fast-growing sector of the mortgage industry that has evolved to meet the needs of today's consumers and to compensate for the deficiencies of consumer bankruptcy law. But some observers fear that such lending could undermine consumer-lender responsibilities and even the economy as a whole. The authors weigh the functions of this industry, its practices and policies, and the changing nature of the consumer finance marketplace to determine whether limiting such lending would serve the public interest.
High Loan-to-Value Mortgage Lending is one in a series of new AEI studies on subjects relating to the deregulation of financial markets. The series focuses on the regulation of the new multiproduct financial services firm; the costs and benefits of the government safety net; pricing and access for banks and nonbanks; globalization and the level playing field; mutual fund regulation; electronic commerce; securities markets; and corporate governance.
Charles W. Calomiris is the Paul M. Montrone Professor of Finance and Economics at the Columbia University Graduate School of Business and a visiting scholar at AEI. Joseph R. Mason is an assistant professor of finance at the Drexel University College of Business and Adminstration.
Table of Contents
Foreword: Christopher DeMuth
- Introduction
- The Evolution of HLTV Lending
- The Relationship between HLTV and Subprime Lending
- A Profile of the Industry
- Risk and the Social Costs and Benefits of HLTV Lending
- HLTV Lending, Personal Bankruptcy, and Cram-Down
- Conclusions
References
About the Authors
