Last year, nearly 1.3 million properties nationwide faced foreclosure filings; two million more families are projected to lose their homes to foreclosure by the end of 2008. About 14 percent of all mortgage loans in the United States are considered subprime. Nationwide, counties whose poverty rates are higher than their state's average also had higher rates of subprime mortgages.
Subprime mortgage rates in high-poverty counties may double, triple, and occasionally quadruple the state average. For example, Texas has an average subprime mortgage rate of 16.7 percent, but in 30 counties – all with poverty rates above the state average - subprime loans make up more than 50 percent of all mortgages.
In eight of the poorest counties, those with poverty rates exceeding 40 percent, subprime mortgage rates exceeded poverty rates, rising as high as 60 percent. This includes Issaquena, MS; Holmes, MS; Starr, TX; and Cameron, TX. The data also indicates that six counties with poverty rates ranging from 20 to 39 percent have subprime mortgage rates reaching as high as 82 percent. For example, rural Culberson, TX, with a poverty rate of 26.2 percent, has 82 percent of its mortgages classified as subprime.
"This mortgage crisis will result in deeper poverty and hunger, especially in communities where poverty is already widespread," said Beckmann. "In the short term, emergency food assistance must increase to meet rising demand, including expanding eligibility to the Food Stamp Program, like in the aftermath of Hurricane Katrina."
Institute researchers examined subprime mortgage rates in counties with poverty rates of 20 percent or higher and those with subprime mortgage rates exceeding 13 percent on average. A total of 1,940 counties were analyzed out of the United States' 3,141 counties.
