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Subprime Loans Went to Rich as Well as Poor

High-rate mortgages accounted for 29% of all home loans last year

By Jason Farago,  Newser Staff

Posted Oct 11, 2007 9:37 AM CDT
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(Newser) – Crunching the numbers on 130 million home loans over the past decade, the Wall Street Journal finds that risky, high-interest loans were extended far beyond the low-income urban borrowers they are usually associated with. Last year, they accounted for 29% of all home loans, up from 16% in 2004. As home prices surged, they were spread throughout all income brackets and geographic locations.

Although poorer neighborhoods do account for a greater percentage of subprime mortgages, they were also flogged to middle income and wealthy borrowers to enable them to buy more expensive homes than they could otherwise afford. The Journal's analysis also finds that the riskiest and most damaging loans were made well into 2006, suggesting that the fallout from the mortgage crisis should continue for years.

An open house is held at repossessed home in San Clemente, Calif. on Saturday, Aug. 4, 2007. The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems with subprime mortgages. The Mortgage Bankers Association reported Thursday, Sept. 6, 2007 that mortgage-holders starting...
An open house is held at repossessed home in San Clemente, Calif. on Saturday, Aug. 4, 2007. The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems...   (Associated Press)
A foreclosure sign tops a sale sign outside an existing home on the market in northwest Denver in this Aug. 29, 2007 file photo. The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems with subprime mortgages. The Mortgage Bankers Association reported...
A foreclosure sign tops a sale sign outside an existing home on the market in northwest Denver in this Aug. 29, 2007 file photo. The number of homeowners receiving foreclosure notices hit a record high...   (Associated Press)
A home is advertised for sale at a foreclosure auction in Pasadena, Calif., in this Aug. 14, 2007 file photo. The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems with subprime mortgages. The Mortgage Bankers Association reported Thursday, Sept. 6, 2007...
A home is advertised for sale at a foreclosure auction in Pasadena, Calif., in this Aug. 14, 2007 file photo. The number of homeowners receiving foreclosure notices hit a record high in the spring, driven...   (Associated Press)
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Money • US

 
housing market • subprime mortgages • home loans • credit crisis • borrowers

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