By Mara Grunbaum, Street Roots Staff writer
The sweeping effects of the national mortgage crisis are beginning to catch up to Oregon homeowners, and in the ensuing storm of foreclosures and financial ruin, low-income minority families may stand to lose the most.
Black and Hispanic Oregonians at all income levels were more likely than whites to have received subprime loans in 2006, according to a study released in January by the Oregon Center for Public Policy, an economic research group.
The subprime mortgage industry — the business of lending money to people with “subprime,” or less than ideal, credit — can help those who don’t qualify for traditional mortgages become homeowners by offering small or nonexistent down payments, interest rates that start low and increase after several years, or minimal requirements for documenting income. But subprime loans are also far likelier than traditional mortgages to end in foreclosure.
Consumer advocates contend that many homeowners have been pushed into subprime mortgages they can’t afford or persuaded to refinance unecessarily by predatory mortgage brokers, who have financial incentives to sign people to expensive loans. In many cases, recipients of the high-risk loans actually qualified for better terms. “We have seen a common practice where someone with a prime rate credit score sits down with their broker and ends up being sold a high-interest subprime loan,” said Angela Martin, director of the Economic Fairness Coalition at the progressive advocacy group Our Oregon.
According to RealtyTrac, a California foreclosure-tracking company, there were 1,099 foreclosure filings in Oregon in December 2007 — more than four times as many as in December 2006. The Center for Responsible Lending projects that 8,372 homes in Oregon ultimately will be lost to foreclosure on subprime loans made in 2005 and 2006.
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