The abundance of subprime mortgages — mortgages often given to people with blemished credit histories — could lead to a rash of foreclosures and shady practices in which homeowners are duped into giving up their homes, Ward 3 council member Mary Cheh warned Wednesday.
Concerns about high foreclosure and delinquent payment rates among people with these types of mortgages sent the Dow Jones industrial average lower by more than 240 points Tuesday.
Many lenders have stopped issuing subprime home loans, with some subprime lenders closing doors all together.
In the region, more than 11 percent of mortgages are subprime, with the majority concentrated in Prince George’s County in Maryland and in Wards 7 and 8 in the District.
Cheh called Wednesday’s hearing to discuss a bill that provides protections for District residents with homes in foreclosure.
“… We have created a condition in which we have made it likely that many people will default of their mortgage,” Cheh said, noting there were more than 2,900 foreclosures in the District last year and 700 so far this year.
Witnesses recounted scams in which they were offered loans to help meet payments but ended up signing over the deed to their homes.
“I have lost my home, a home worth almost $300,000,” D.C. resident Catherine Meads said.
“At one of the most vulnerable times in my life, predators came and have defrauded me. I urge the council to use whatever means possible to keep other D.C. residents from being stripped of their rightful property in such a deceitful manner,” she said.
