The patchwork of state anti-predatory-lending laws often prevents consumers, especially those traditionally underserved by financial institutions, from obtaining affordable home equity loans, according to the Washington counsel for the National Home Equity Mortgage Association.In written testimony submitted to a Federal Reserve Board hearing in Chicago on the home equity market, Wright H. Andrews said policymakers "must take great care to ensure that legislative and regulatory changes do not result in unnecessary or unintended adverse impacts on this critically important nonprime segment of the mortgage market." Mr. Andrews said some state laws have had positive effects but have hurt consumers in other ways, such as "limiting loan affordability and access to credit for many high-risk borrowers." He argued that most of the "tougher" state predatory-lending laws have caused lenders to stop offering flexible financing that makes loans more affordable. They have also caused lenders to stop making "high-cost" loans due to the "increased perception of legal and reputational risks" on the part of major nonprime lenders, he said. Mr. Andrews also called for uniform federal mortgage lending standards, arguing that they would "greatly reduce compliance costs, allowing lenders to pass on savings to borrowers by offering lower rates." NHEMA can be found at http://www.nhema.org.

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