NEW YORK — Loan products, not income, are the reason why mortgage borrowers default, according to a report released yesterday by the Local Initiatives Support Corp.
Delinquency and foreclosure rates for subprime borrowers were comparable across all income levels, according to Michael Rubinger, LISC president and CEO.
"This reinforces what years of experience have already told us: Low-income residents are not, by definition, poor credit risks. Unsuitable mortgage products are," he said.
Recommended For You
LISC studied delinquency and foreclosure rates from March 2007 through March 2008. It found that default rates for all loan types rose significantly over that 12-month period, with subprime foreclosures vastly outstripping prime defaults. But among subprime borrowers, LISC also found that income level had little correlation to foreclosure rates.
LISC said in a written statement that the findings are particularly important as the country considers the value of the Community Reinvestment Act. Republican lawmakers last week urged the Justice Department to investigate the GSEs for mortgage fraud and overzealous lending under the act, claiming that such lending is at the center of troubles in the mortgage-related markets.
LISC helps community-based organizations revitalize underserved neighborhoods.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
