Report Finds 59% Of NYS Foreclosures Linked To Subprime Loans, Minority Communities Targeted

In New York State, CNNMoney.com reports:

• Mortgage scammers took advantage of loopholes in New York State lending laws to defraud homeowners and lending institutions all over the state, according to a new report released Thursday. The New York State Commission of Investigations reported that the state's mortgage borrowers need more regulatory protection from predatory lenders. It also linked subprime loans closely to New York's growing foreclosure problem; in 2007, 59% of all foreclosures statewide involved subprime loans.

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• In one example [of a case in which there was never any possibility that the borrower could afford to pay off a loan] from 2006, Suzette Francis, a woman with two young children, no assets, working as a $10-an-hour security guard and living in a homeless shelter, obtained a mortgage for $470,000 that, as the report stated, "exhibited ... every characteristic and feature associated with dangerous subprime loans." [...] She would have to work 400 hours a month just to pay her loan.

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• Particularly targeted all over the nation have been minority communities. The Commission found that, all other things equal, New York state African-American and Hispanic borrowers were twice as likely to have subprime loans as whites. A lot of 'one-stop-shops,' where real estate agents are also mortgage brokers, operate in minority neighborhoods," said Mary Biunno, senior assistant counsel for the Commission, "and they rope in a lot of people."

For more, see Foreclosures linked to subprime fraud (New York state investigation of subprime mortgage practices reveals fraud proliferated in the state, which had the eighth-highest number of foreclosures in 2007).

For the report, see A Perfect Storm: Easy Money and the Mortgage Meltdown - The Subprime Mortgage Crisis in New York State. PredatoryLendingRaceBias