Michael Collins Study of High-Risk Mortgage Regulation

J Michael Collins has written Protecting Mortgage Borrowers through Risk Awareness: Evidence from Variations in State Laws, 48 J. Consumer Affairs 124 (2014).  Here is the abstract:

In the wake of historic levels of mortgage defaults, regulators have debated how to regulate certain high-risk loans because of the risks of foreclosure involved. This study examines state laws that required loan applicants to receive information about the risks of foreclosure before they could sign certain mortgage contracts. Skeptics suggest that disclosures are largely ignored by consumers, yet controlling for other factors this study shows that loan applicants in states with enhanced warnings about foreclosures were more likely to reject high-cost refinance mortgage loan offers from a lender. Enhanced disclosures with features such as risk warnings, signatures, and referrals to counseling are being implemented as part of Dodd–Frank consumer finance reforms. This study suggests these strategies may be useful to balance consumer protection and access to high-risk credit.