Sub-Prime Loans: Not Just for the Low-Income

While the media tends to report that the sub prime loan debacle effects mostly low income buyers, a new report says differently.

By Darryle Raynard The media often portrays victims of the sub-prime lending crisis as poor members of minority groups. While it is true that a disproportionate number of loans provided to low-income or minority borrowers are categorized as “sub-prime”, the largest number of borrowers affected by sub-prime mortgages are white middle and upper income borrowers. African-Americans make up 13.9 percent of all mortgage loans in 2006, but over 20 percent of “sub-prime” loans were those issued to African-Americans. Alternatively, over 66 percent of mortgage borrowers were Caucasian in 2006. 55 percent of all sub-prime loans went to white buyers. ComplianceTech, an Arlington, Va., consulting firm has released these numbers, after compiling a report based on information from the Home Mortgage Disclusure Act. Reports like these are important, since lawmakers are basing many of their decisions on media perception and reports. If lawmakers formulate laws that deal primarily with the low-income buyer, they may leave everyone else out in the rain. “We need to broaden the prism,” says Maurice Jourdain-Earl, Managing Director of ComplianceTech, “and realize that there are a number of families, many of whom are suburban or even rural, who are also suffering.” A one-size-fits-all solution may not solve everyone's problems. It is important that lawmakers examine all of the facts as to who has been affected by the sub-prime debacle, since a law that doesn't help the hardest hit segment of the populace won't do the greatest good.