Title

Unsafe Loans in a Deregulated U.S. Mortgage Market

Comments

Published at 30 Pace Law Review 154 (2009)

Document Type

Conference Proceeding

Abstract

This Article explores actual market outcomes in a deregulated mortgage market to ascertain if market discipline can be relied upon to ensure safe and sound loan products. In Part I of this article, the bank regulators’ decisions to deregulate the mortgage market are set forth. In Part II, the outcomes generated by such a legal environment are presented. Such outcomes reveal steadily increasing availability and acceptance of risky loan products, resulting in equity stripping due to subsequent defaults. In Part III of the article, an alternative regulatory approach is offered—one that imposes a minimum required level of safety for all loan products.