Center for Responsible Lending Report Predicts Subprime Mortgage Disaster

Posted on December 26, 2006 by Kevin Chern Esq.
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We talked back in July about the growing impact of ARMs reaching their "shock points" during 2006 and 2007.  Last week, a study released by the Center for Responsible Lending substantiated those fears with data collected through the study of 6,000,000 subprime mortgage loans. 

In a press conference held in conjunction with the National Association of Realtors and the Leadership Conference on Civil Rights, the Center for Responsible Lending announced dismal findings:

  • 1 in 5 families who take out a subprime mortgage loan today will end up in foreclosure
  • Nearly 1/4 of all mortgage loans made this year were subprime
  • An Adjustable Rate Mortgage is 72% more likely to go into foreclosure than a fixed rate mortgage
  • More than 50% of mortgage loans made to African Americans and more than 40% of those made to Latinos were high-cost loans, even though many of these borrowers could have qualified for more favorable mortgages
  • Homeowners with multiple refinances (which are common in subprime lending) face a 36% chance of foreclosure
The full report is available here:  Losing Ground:  Foreclosures in the Subprime Market and Their Cost to Homeowners
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