The HMDA research shows that the merchandise that is for sale of the subprime lenders is mainly the refinance loan, either that have an extremely limited advantage to the newest borrower and therefore you to minimal work for may have been precisely why that borrower try keen on the latest subprime mortgage, for example some funds or consolidating loans or a home improvement. I’d like the fresh panel to store you to definitely in your mind as I create my personal comments about pricing and things and foreclosures rates.

I think I could help save investigation collection to have last. The research that i did could be wrote when you look at the a blog post in the Sc Laws Remark. Im complementing brand new checklist and i will be sending a good duplicate to each of your own People in the fresh new panel one to outlines the history of your subprime community off DIDMA and you can AMPTA because of the present day globe. This has 661 footnotes, a long time personally to undergo now, however, I am hoping you are going to take time to glance at they for a historical perspective about precisely how we have got to where we have been today.

I looked at over 1 million finance in order to get an effective feeling of what the rates had been in the industry

The speed investigation we tested originated in the new 14 finest subprime domestic guarantee lenders. A bunch of legislation pupils and i looked at securities prospectuses filed of the half dozen of your own 14 most readily useful subprime loan providers. That’s because there were merely half a dozen that have been securitizing.

Brand new prospectuses has to define the borrowed funds pond that they’re promoting ties within the, in order that is the place i had the rate advice.

For those of you who have my personal statement before you, for folks who consider Appendices step 1 and you will dos out-of my statement, that is the consolidated investigation towards many years we checked out which is 1995-1999. The following appendices break it down of the 12 months, by financial and that i took these graphs and you will noted from inside the here just what antique rates was.

Of course the latest prices is actually notably more than he’s for conventional rates. We are really not talking generally one or two commission facts; we have been speaking a serious upsurge in new commission items. My composed testimony provides the average cost that’s anywhere between 10 and you can several percent, but you can see the prices wade all the way to 20 %.

I then took part in one minute investigation getting reason for the fresh HUD Predatory Lending Task Force into foreclosure. In order to do one, a colleague out-of mine and i chime loans also tested SEC fillings and you may sixteen of your own most readily useful servicers. We checked-out a little less than half the new outstanding subprime personal debt. I looked at more $163 million from inside the fund.

Next i and additionally looked at unmarried financial statistics

The latest appendices you start with Appendix fourteen feel the is a result of those people studies. We were shopping for 90-days-along with delinquencies and worse. So we were thinking about property foreclosure, bankruptcies, REOs that’s a home possessed you to wasn’t offered but really from the team one foreclosed, so we discover the general speed with the pool out of finance i looked at, that is these types of sixteen loan providers, was around 4.65 percent.

You to definitely measures up having an overall rate also subprime mortgage loans of 1.54 %. Therefore, the foreclosure rates full is significantly higher. It is quite greater than the Virtual assistant and you will FHA funds, that have Virtual assistant financing averaging aside at dos.27 percent and FHA finance averaging away at 2.57 %. That is mirrored regarding graphs within the Appendix fifteen.

I examined one to company, Equicredit, and found that anywhere between 1995 and 1998 their delinquencies ran away from 5.58 per cent to 8.27 per cent, its major delinquencies. Therefore contained in this one organization, foreclosure rates and you will major delinquencies, being on course having property foreclosure, has also been increased.