Study: NJ Law Led to Plunge in Subprime Lending

New Jersey's new predatory lending law has prompted a "startling" decline in subprime lending in the state, according to a study conducted for the National Home Equity Mortgage Association and the National Association of Mortgage Brokers.NHEMA said the study by Richard F. DeMong, a finance professor at the University of Virginia, found that subprime cash-out refinance loans fell by 67.2% in New Jersey in just two months, and home improvement loans dropped by 75.4%. "The study's results are statistically significant and quite startling," Dr. DeMong said. "They show that the New Jersey Home Ownership Act has unintentionally sharply reduced legitimate lending to deserving borrowers. We estimate that lending through the lenders and mortgage brokers surveyed for this study fell by up to $1 billion in just two months." NHEMA can be found online at http://www.nhema.org.