Center for Responsible Lending Report Predicts Subprime Mortgage Disaster

Posted on December 26, 2006 by Kevin Chern Esq.

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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