| Tougher for Subprime Borrowers to Keep Homes
Subprime loans make real foray into housing market, Harvard says June 24, 2003 By ANNE LINEBERRY |
| Subprime loans have skyrocketed recently, allowing more borrowers to become homeowners, says Harvard University’s Joint Center for Housing Studies.
However, those homeowners are at a substantially higher risk of losing their homes, the report, The State of the Nation’s Housing, concluded. The study noted concern that subprime loans tend to be concentrated in low-income, minority neighborhoods. In these neighborhoods, subprime refinances accounted for 27.5 percent of all refinances in 2001, according to the study. This number is up from 6.8 percent of the total in 1993. Subprime purchase loans accounted for 13.4 percent of the total in 2001, up from 2.4 percent in 1993 for these neighborhoods, the study said. For metro areas as a whole, in 2001, subprime loans garnered 6.5 percent of all purchase loans and 10.1 percent of refinances, according to the study. The concentration of these risky loans in could cause grave consequences for these areas if a wave of foreclosures came through, including a glut of homes on the market that would lower prices and threaten neighborhood stability, the study said. Currently, about nine of 10 subprime borrowers pay off their mortgages, the study said. According to the Mortgage Bankers Association of America, about seven percent of subprime mortgages were in foreclosure during the first quarter of 2003 and about 12 percent of subprime mortgages were delinquent. In other comments concerning the conventional mortgage market, the Harvard study concluded that more than $134.5 billion went to pay off second mortgages and rolled directly into new first mortgages. |
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Anne Lineberry is MortgageDaily.com‘s editor. She previously worked as an online editor/producer for DallasNews.com and on the Metropolitan desk for the print edition of The Dallas Morning News. Email Anne at AnneLineberry@MortgageDaily.com |
