Homeowners across the state with subprime mortgages may be setting themselves up for financial disaster.
According to the Mortgage Bankers Association, there was a 12.39 percent increase in subprime loans by Marylanders in the fourth quarter of 2006. With such an increase, it is only natural that this will also spawn more defaults as owners struggle to make the larger payments.
The largest victims of subprime lending in the Baltimore area seem to be residents of Baltimore City, whose residents have taken out an alarming 14.2 percent of their loans from subprime lenders. According to statistics acquired by The Examiner from Data Place, a census and housing data Web site, this number is only compounded by 33.7 percent of mortgage refinancing loans being brokered by subprime lenders.
“Even with higher incomes, you may have got suckered in with a low teaser rate,” Urban Institute Senior Research Associate Peter Tatian said. “People will be able to get out of it, it?s just going to cost them some money to do it.”
An increase in the number of loans issued by subprime lenders comes during what analysts call a meltdown of the subprime mortgage market. Late payments and foreclosure rates are at record highs and many lenders have stopped offering the instruments or have been forced to close, contributing to steep losses on Wall Street in recent weeks.
Of all the counties in the Baltimore region, the one that appears to be in the best situation with subprime mortgages is Howard, which saw only 8.2 percent of its in-county mortgage loans taken out with a subprime lender.
Staff Writer Dave Francis contributed to this story
