Industry News

Center issues dire report on subprime defaults

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The Center for Responsible Lending predicts that one of five subprime mortgages originated in the past two years will end up in foreclosure, and that as many as 2.2 million households have already lost their homes or will end up in foreclosure in the next several years. The center says it analyzed the performance of more than 6 million subprime mortgages going back to 1998 for its report, "Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners." The report claims the chance of foreclosure on a subprime loan doubled between 2002 and 2005, with subprime loans originated in 2002 having a 10 percent chance of foreclosing over the life of the loan, compared with a 20 percent chance of subprime loans closed in 2005 and 2006. The center is a nonprofit, nonpartisan research and policy organization that is affiliated with Self-Help, a community development financial institution. Rather than serving as a stepping-stone to a prime loan, many borrowers refinance into...