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
Subprime Loans Went to Rich as Well as Poor
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...   (Associated Press)

(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. (Read more credit crisis stories.)

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