"Local authorities in North Carolina, and subsequently in at least 23 other states, have enacted laws intending to reduce predatory and abusive lending. While there is substantial variation in the laws, they typically extend the coverage of the Federal Home Ownership and Equity Protection Act (HOEPA) by including home purchase and open-end mortgage credit, by lowering annual percentage rate (APR) and fees and points triggers, and by prohibiting or restricting the use of balloon payments and prepayment penalties. Empirical results show that the typical local predatory lending law tends to reduce applications and rejections, while having little impact on the flow of credit and only a modest impact on interest rates. However, the strength of the law, measured by the extent of market coverage and prohibitions, can have strong impacts on
both the flow and cost of credit"--Federal Reserve Bank of St. Louis web site.