Released: June 14, 2007

Home ownership isn’t paradise for everyone

Source: Howard Karger, Dollars and Sense [AlterNet]

Anyone who has given the headlines even a passing glance recently knows the subprime mortgage industry is in deep trouble. Since 2006 more than 20 subprime lenders have quit the business or gone bankrupt. Many more are in serious trouble, including the nation’s number two subprime lender, New Century Financial. The subprime crisis is also hitting Wall Street brokerages that invested in these loans, with reverberations from Tokyo to London.

And the worst may be yet to come. At least $300 billion in subprime adjustable-rate mortgages will reset this year to higher interest rates. CNN reports that one in five subprime mortgages issued in 2005-2006 will end up in foreclosure. If these dire predictions come true, it will be the equivalent of a nuclear meltdown in the mortgage and housing industries.

What’s conspicuously absent from the news reports is the effect of the subprime lending debacle on poor and working-class families who bought into the dream of homeownership, regardless of the price. Sold a false bill of goods, many of these families now face foreclosure and the loss of the small savings they invested in their homes. 

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