Subprime Lending Crisis: Millions of Families Face Losing Their Homes to Foreclosure

Subprime loans have led to one million American families losing their homes in the past decade. This according to a new study by the Center for Responsible Lending. In the last ten years, the subprime loan industry has emerged as a major, and controversial, player in the housing market. Under a subprime loan, customers with low credit ratings are offered mortgages in return for high interest rates. Proponents have advocated subprime financing as a way for low-income residents to own their first home. But new figures suggest the subprime industry is having the opposite effect.

The Center for Responsible Lending estimates that between 1998 and 2006, about 1.4 million first-time home buyers purchased their homes using subprime loans. But the study also finds that the number of projected subprime foreclosures in that same period to be a whopping 2.4 million. This means subprime lending results in a net loss of home ownership for almost one million families.

Here in New York, the Neighborhood Economic Development Advocacy Project put out a report showing foreclosures rose fifty percent last year -- with more than 9,000 homeowners facing the loss of their homes. By the end of this year, foreclosures are now on track to rise to fifteen thousand.

* Keith Ernst, senior policy counsel for the Center for Responsible Lending.

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