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Subprime: It Never Did Help Homeownership
Student of the Tao goes mythbusting, after reading the Seattle Times:
Myth 1: Sub-prime mortgages allow bad credit risks to buy homes.
Locally and nationally, nearly all of Ameriquest's loans went to people who already owned homes, The Times found.
In 2004, the year Taylor obtained her final subprime mortgage, only two Ameriquest mortgages helped people buy houses in King County — far less than 1 percent of the total. The remaining 1,286 loans that year were nearly all refinances for borrowers who already owned their homes.
Likewise, nationally, less than 1 percent of Ameriquest's loans that year helped people buy homes. The next year, less than 3 percent of Ameriquest loans nationally were for home purchases. Ameriquest declined to discuss The Times' findings, as did other industry representatives.Myth 2: Sub-prime mortgages help young people buy houses.
More than one in three borrowers in King County who got loans from the same lender that foreclosed on Taylor were 50 or older, and one in seven was 60 or older.
The study was of Ameriquest mortgages, and Ameriquest by all accounts was one of the most egregious lenders. But one certainly hears much less these days about how "on the whole the subprime boom appears to have created more winners than losers". Surowiecki? Have you changed your mind on that one yet?
