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Subprime Meltdown Hits Brooklyn the Hardest
By
Dave Hogarty
Published Jan 26, 2008
Modified Mar 7, 2008
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By
Dave Hogarty
Published Jan 26, 2008
Modified Mar 7, 2008
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According to The Federal Reserve Bank of New York, the 11233 zip code that encompasses Bedford-Stuyvesant and Crown Heights had the highest foreclosure rates for subprime mortgages in the entire nation in October. More than one in four people, or 25.2%, with subprime loans in the zip code lost their homes to foreclosure. That's almost four times the national average of 6.9%.
It's a stark example of the toll that the lending meltdown is taking on poorer neighborhoods. Those areas' residents were able to get loans in spite of poor credit histories or with little money down. Exposure to higher interest rates left these homeowners in a precarious position.
The Daily News reported that a 2006 study indicated that Blacks and Latinos were offered interest rates 30% higher than people outside of those groups with a similar credit history. One can see in the map at left the disproportionate affect the lending crisis is having on minority neighborhoods.
Over the summer, the city recorded increases in home foreclosures everywhere except Staten Island. Financial markets and banks are taking huge hits on their investments in subprime loans, with Citigroup writing down billions in bad debts and having to seek an infusion of additional capital. Investment bank Goldman Sachs, however, made several billion dollars in just a few weeks by betting the opposite direction of everyone else on the Street.
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