State legislators beware! That was the theme of last week's panel discussion hosted by the American Securitization Forum on predatory lending legislation. With both New York and New Jersey set to implement laws similar to the recently amended Georgia Fair Lending Act, panelists warned that political one-upmanship and catering to consumer advocacy groups will ultimately increase the cost of borrowing for consumers.
The negative reaction from rating agencies as well as the lending community to the GFLA exemplifies "a bad thing that can happen" if states enact laws that expose mortgage lenders to "unquantifiable liability." Panelists feared similar situations were on the horizon. The most efficient outcome, all agreed, was federal legislation, preempting state law, which would govern behavior nationwide.