A new study released today (Thursday) points to some success with laws aimed at reining in abusive lenders. The Center for Responsible Lending studied lending-reform laws in 28 states, and analyzed more than 6-Million home loans from 1998 to 2004. The center’s Senior Policy Counsel Keith Ernst calls predatory lending “a cancer that should be wiped out.” Ernst says predatory lending reforms are “weeding out” loans with abusive terms. He cites the study’s finding that 20 of 28 reforms examined showed much less predatory lending than states without reforms.

Iowa Attorney General Tom Miller says the study found strong laws to cut back abusive lending did NOT cut off credit to families buying a home. Miller says reformers kept hearing in legislative forums that credit would dry up if states restricted laws to do away with the abuses. “Common sense told us that was wrong,” he says, calling that argument a “diversion, a sidestep, a sophistry, an excuse or worse.”

The study confirms it, Miller says. In more than two-dozen states, laws are now in place to limit unfair fees, questionable lending practices and other tactics — and Miller says they’re working. In a way Miller says the argument that “credit will dry up” is an insult to responsible lenders in the industry. He says lenders don’t need predatory practices — they can observe the law and still extend credit. In Iowa one change was eliminating pre-payment penalties about three years ago.

The study announced today indicates the change took place, lending didn’t fall off, and interest rates even went down marginally. Miller says, “Iowans are so much better off because of that reform.” Payday loans, mortgage flipping and other predatory lending practices are all targets for the reforms advocated by the Center for Responsible Lending. Read more about the study by surfing to “Responsible Lending-dot-org.”