Over the past nine years, the subprime market has produced more than $2 trillion in home loans, but contrary to industry assertions, these loans have not resulted in a net gain in homeownership. Between 1998 and 2006, only about 1.4 million first-time home buyers purchased their homes using subprime loans. In CRL’s “Losing Ground” report, we estimated that over 2.2 million borrowers who obtained subprime loans will lose or have already lost their home to foreclosure. Updating the analysis to include subprime originations for fourth quarter 2006 increases the total number of projected subprime foreclosures to 2.4 million.
The result: Subprime loans made during 1998-2006 have led or will lead to a net loss of homeownership for almost one million families. In fact, a net homeownership loss occurs in subprime loans made in every one of the past nine years.
By the time it's all over, I wonder how many other products of Wall Street's imagination will end up "achieving" something similar?