Lowell Deeds

A study released on Wednesday and reported in yesterday’s New York Times predicted a dire future for those holding subprime mortgages. These are mortgages made to people with bad (or not very good) credit. Because the bad credit history poses more of a risk to the lender, a higher rate of interest is charged. Well it appears that some lenders may have gotten greedy and were enticed by the prospect of a higher rate of return when interest rates were historically low. This caused the subprime market to blossom. They now make up a quarter of all outstanding mortgages. This study predicts that twenty percent of these mortgages will be foreclosed in the coming years, causing one of the study’s authors to predict “the worst foreclosure crisis in the modern mortgage market.” While I wouldn’t go that far, the situation is worsening here in the Northern Middlesex District. We will, of course, provide frequent updates on this situation.