Center for Responsible Lending Report Predicts Subprime Mortgage Disaster
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