These HUD-Treasury forums will document the extent of this abuse nationwide and will provide recommendations to the Congress on how best to protect the pocketbooks of borrowers and the reputations of the nation's good lenders from those who have turned the dream of homeownership into a nightmare. Abusive practices should have no place in the subprime market, or any other market.
Subprime loans are almost five times more likely in black neighborhoods than in white ones.
The HUD study focused primarily on home refinancing loans, which account for 80 percent of subprime loans. Subprime lending involves providing credit to borrowers with past credit problems, who cannot qualify for the conventional prime market. Subprime lending can help to expand access to credit for more Americans. However, some lenders may engage in predatory or abusive lending practices that can hit homebuyers with excessive mortgage fees, interest rates, penalties and pre-paid credit life insurance charges, loan flipping, or home improvement scams that can raise the cost of home ownership for families. HUD's study also cited a recent Abt Associates analysis of mortgage foreclosures in 12 of 16 counties in the Atlanta area, which found that while overall foreclosure volume fell 7 percent between 1996 and 1999, subprime foreclosures rose 232 percent in the same period during which subprime lending also increased rapidly.