The Center for Responsible Lending held a press conference on December 19 to reveal the results of its study of more than 6 million subprime mortgages made from 1998 through the third quarter of 2006, and the picture is bleak. The Center estimates that 2.2 million households currently in the subprime market will lose their homes in the next several years.
The report further projects that 1 in 5 subprime mortgages originated in the past two years will end in foreclosure. The chance of foreclosure on a subprime loan doubled between 2002 and 2005. Even during those earlier days, however, subprime mortgages had a 10% chance of ending in foreclosure, putting those borrowers at much greater risk than those who finance through traditional mortgages.
Statistically, these higher-risk loans are more often offered to African American and Latino borrowers, although in many cases those borrowers could have qualified for a more favorable mortgage loan.
Tags: adjustable rate mortgages, ARMs, foreclosure, Home Foreclosure, housing market, subprime mortgages
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