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pilot program
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New study estimates the effect of predatory-lending law ushakrisna.com 5 facts
claimThe pilot program had a significant impact on mortgage market activity but a moderate effect on borrower default rates.
measurementLoan application volumes by state-licensed lenders in the pilot area declined by 51%, and loan origination volumes declined by 61%.
claimThe pilot program resulted in a reduction of loans featuring negative amortization, prepayment penalties, low documentation requirements, and low down-payment requirements.
measurementAmong subprime borrowers and state-licensed lenders targeted by the pilot, 18-month default rates improved by 6 to 7 percentage points, relative to the unconditional default rate of 27%.
measurementThe average FICO score of borrowers obtaining credit during the pilot period was 8 points higher than the average FICO score of borrowers prior to the pilot, representing 15% of one standard deviation.