The warning espoused by the mortgage business to beat back legislation aimed at reining in abusive lenders, namely that low-income borrowers will lose access to credit, has been debunked by two new studies.

In North Carolina, where the nation's first predatory lending law took effect in 1999, a report by the non-profit Center for Responsible Lending found that "subprime" lending to persons with blemished and sometimes deeply pitted credit has continued to thrive.

And on Wall Street, a report by Morgan Stanley & Co. has found that predatory lending laws have had no impact in any state or municipality where they have been enacted.

Nearly a dozen other states and several cities have now adopted predatory lending laws.

Disputing the findings, Armand Cosenza, president of the National Association of Mortgage Brokers, said that while the number of loan brokers who live and work in North Carolina may have remained static, the number of lenders actually willing to fund subprime loans in the state has declined.

In his home town of Cleveland, he added, 20 subprime lenders and one lender who deals only with A-rated credit-worthy borrowers closed their doors within two weeks after Ohio passed predatory lending legislation.

"There's no doubt that certain products are no longer available" in places were abusive practices have been banned, Cosenza said. "Some otherwise good loans can't get placed at all."

But in the Morgan Stanley telephone survey conducted earlier this summer, managers at 280 subprime branches reported that competition among mortgage brokers for loans remains strong, according to Ken Posner, an analyst with the brokerage house.

The firm surveyed branch managers because they tend to have the "best trench-level understanding of current business dynamics."

The Center for Responsible Lending study came to a similar conclusion after reviewing data collected under the Home Mortgage Disclosure Act, a finding its authors say "bodes well for other states" that want to control lending abuses within their borders.

"Now we know, based on official data reported to federal regulators, that the first predatory lending law in the nation is working to protect families...without drying up credit to low-income borrowers," said Eric Stein, a spokesman for the Center who urged lawmakers in other jurisdictions to consider the findings when considering their own laws to curb rouge lenders.

This year alone, Stephanie Shaw of Lotstein Buckman, a Washington law firm which recently resigned as NAMB's general counsel, said she has followed more than 140 separate initiatives offered in an attempt to restrain rouge lenders.

According to the North Carolina study, the state remained the sixth most active for subprime lending in 2000, with borrowers 20 percent more likely to receive such a loan than those in the rest of the country, the study found.

No major subprime lender has exited the Tar Heel State, the study also found, and every major lender that reported that reported new lending activity in any other state also reported making new loans in North Carolina.

What's more, the study estimates that consumers saved at least $100 million in lending costs in the first year since the landmark North Carolina law was passed.

Among other things, the statute bans the financing of single-premium life insurance premiums on second mortgages as part of the loan amount, prohibits refinancing when there is no benefit to the borrower, and outlaws prepayment penalties on loans under $150,000.

Researchers estimated that North Carolina borrowers saved $41.6 million on life insurance premiums alone, $29.7 million in prepayment penalties, $10.4 million in excess fees and $18.6 million in unnecessary refinancing.

They also said the savings attributable to the ban on financing life insurance premiums was a conservative figure. Because borrowers also pay unnecessary interest on the premium for the life of the loan, they said, the savings could easily be three times that amount.

"Don't estimate how big a rip-off it was," North Carolina Gov. Mike Easley said at a press conference in Raleigh where the study was released.