CFED Assets & Opportunity Scorecard
|High-Cost Mortgage Loans|
This measure describes the percentage of home purchase loans that have a significantly higher-than-average APR. Typically, lenders have targeted elderly, minority, and low-income families with these products, which put these families at greater risk of foreclosure and loss of home equity. The prevalence of these high-cost, or subprime, mortgage loans during the housing bubble of the mid-2000s led to the financial crash and subsequent recession. However, since the passage of the Dodd-Frank Act and the creation of the CFPB, new measures have been taken to prevent their spread.
High-Cost Mortgage Loans, 2011
Percentage of home purchase loans that are high cost, 2011.
High cost is defined as an interest rate spread of 1.5 percentage points for a first lien loan and 3.5 percentage points for a second lien loan between the loan’s APR and the estimated average prime rate offer.
Home Mortgage Disclosure Act. Washington, DC: Federal Financial Institutions Examination Council, 2012. Data accessed through PolicyMap.