subprime lending Tag

19 Nov Inner Cities are Not to Blame for Sub-Prime Mess

A recent editorial in a Connecticut newspaper blamed the sub-prime mess on the nation's inner cities and their mayors who clamored for money to finance homes for low-income families. While it is true that lenders largely ignore the deteriorating inner cities, lending is always driven by profit, not social policies. If the two happen to mesh, then it is a happy coincidence. It's all about profit. Foreclosure rates are up exponentially in Connecticut's metropolitan areas to the tune of 450% to 500%. However, the looser lending standards were not driven by any political demands, but rather by profit. Borrowers were encouraged to buy homes they could not afford and sellers reaped the rewards of higher sales prices. Then homeowners were encouraged to borrow more money against their homes to finance a higher living standard. Local retailers reaped the rewards of higher sales of more profitable goods. This was as true in the suburbs as it was in the inner cities.
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12 Nov Connecticut Takes Baby Step on SubPrime Mortgages

Connecticut 's Governor Rell announced the first product of her commission on the sub-prime mortgages. The commission recommended a special program for first-time homeowners with sub-prime mortgages. Under the program, low- and moderate-income consumers will receive special rates on a refinance of a sub-prime mortgage provided they are fully qualified. Foreclosure rates in the inner cities where most low and moderate income families live have increased 450% to 550% in the first half of 2007.
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