The HMDA study signifies that the product which is being sold by the subprime loan providers is primarily the fresh new refinance mortgage, often with an incredibly minimal benefit to the borrower which one to limited benefit was precisely why that borrower is attracted to the latest subprime mortgage, like some cash otherwise combining loans otherwise a home improvement. I want new committee to store you to definitely planned because I make my comments regarding prices and you can products and you will foreclosure prices.

I do believe I can conserve analysis collection getting past. The research which i performed might possibly be wrote inside the Alabama title and loan a blog post regarding Sc Law Opinion. I’m supplementing the fresh new listing and that i will send a beneficial copy to every of Members of the fresh committee you to definitely traces the historical past of one’s subprime world out of DIDMA and you may AMPTA through the present day business. This has 661 footnotes, a long time personally to go through now, but I’m hoping might make sure to evaluate it getting an ancient perspective about how precisely we surely got to in which the audience is now.

I checked more one million loans in order to rating good sense of just what interest levels was in fact in the business

The rate studies that people looked at came from this new 14 finest subprime domestic equity lenders. A bunch of legislation pupils and i also checked out ties prospectuses filed by the half dozen of fourteen finest subprime lenders. This is because there have been only half a dozen that were securitizing.

The fresh new prospectuses has to determine the loan pond they are attempting to sell securities from inside the, with the intention that is the perfect place we got the speed suggestions.

For the people that my personal statement facing your, for those who take a look at Appendices step one and you can dos off my declaration, this is the consolidated data on years i examined which is 1995-1999. The next appendices split it off of the year, by lender and i have taken this type of graphs and you can noted into the here just what traditional rates are.

Obviously the latest rates is significantly greater than he or she is to possess conventional pricing. We are not speaking generally a small number of percentage issues; the audience is speaking a critical upsurge in the fresh new fee circumstances. My authored testimony provides the average costs that is ranging from ten and you can several percent, you could understand the cost go as high as 20 %.

Then i took part in the next studies getting reason for the brand new HUD Predatory Lending Activity Push to the foreclosures. In order to do one to, a colleague out of exploit and i checked SEC fillings and sixteen of one’s most useful servicers. We tested a little less than simply half of brand new a fantastic subprime loans. I checked out more than $163 mil into the money.

Following we also checked-out unmarried financial analytics

Brand new appendices you start with Appendix 14 feel the is a result of men and women knowledge. We were seeking 90-days-in addition to delinquencies and even worse. Therefore we had been deciding on foreclosure, bankruptcies, REOs that’s a property possessed that has not been offered yet by party one to foreclosed, and then we discovered the entire speed to your pond regarding loans we checked-out, that’s these types of 16 loan providers, try approximately 4.65 %.

That measures up having a total price including subprime mortgage loans of 1.54 %. So the foreclosure price full is a lot high. It is quite much higher compared to the Virtual assistant and you will FHA finance, which have Virtual assistant loans averaging away at the dos.twenty seven % and you can FHA financing averaging away at dos.57 per cent. That is shown from the graphs within the Appendix fifteen.

We checked out you to definitely team, Equicredit, and discovered you to definitely anywhere between 1995 and you may 1998 their delinquencies went off 5.58 % to 8.twenty seven %, their really serious delinquencies. Thus in this one team, foreclosures costs and major delinquencies, which happen to be lead for property foreclosure, was also enhanced.