Why So Few Foreclosures in Vermont?
Today’s Wall Street Journal has a very interesting article (sub. required) that makes the connection between the strong laws against predatory mortgage lending that Vermont adopted in the late 1990s and the current very low foreclosure rate in that state.
While the federal government sat on its hands in response to the surge in predatory lending between 1995 and 2000, Vermont reacted forcefully to the abuses imposed on its residents. Among other measures, the state’s new laws mandated that mortgage brokers had a fiduciary duty to serve the best interests of the borrowers for whom they arranged mortgages, and that lenders who offered interest rates that were substantially higher than their competitors had to inform their customers “on a colored piece of paper, chartreuse or passion pink.”
How has this worked out? The Journal contrasts the situation in Vermont, which ranks last in the nation with only one home out of every 28,300 in some stage of the foreclosure process, with top-ranked Nevada, where one out of every 56 homes is in the foreclosure process.
(Photo: Grant MacDonald)