AMTPAAlternative Mortgage Transaction Parity Act
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Although the subprime mortgage market emerged in the early 1980s with the adoption of DIDMCA, AMTPA, and TRA, subprime lending rapidly grew only after 1995, when MBS with subprime-loan collateral become more attractive to investors.
This rapid increase can at least partially be attributable to regulatory changes in the interpretation of the 1982 AMTPA by the Office of Thrift and Supervision (OTS).
This was likely caused by (i) the introduction of predatory lending laws in many states and cities (typically these include ceilings on interest rates and upfront fees, restrictions on prepayment penalties, and other factors)12; (ii) the evolving position of Fannie Mae and Freddie Mac on pre payment penalties; and (iii) the reversed OTS interpretation of AMTPA in 2002 (see 67 Federal Register 60542, September 26, 2002), which again made state laws apply to finance companies just as they had prior to 1996.