Secret #29 – For Mortgages, “Affordable” is Code for “Higher-Foreclosure”

We went from mortgages (mainly for middle-income Whites) that had extremely low foreclosure rates during the 1940s and 1950s - including low foreclosure rates during 4 recessions in the 1940s and 1950s - to mortgages that had much higher foreclosure rates even during the booming 1990s.

"This higher level of risk is apparent in the aggregate foreclosure rates of recent stable economic times that often exceeded the foreclosure rates of the post-1926 bust and the Great Depression." – Eugene N. White, “Lessons from the Great American Real Estate Boom and Bust of the 1920s,” 2009.

“The FHA program has a national default rate 3 to 4 times the conventional market, and in many urban neighborhoods it routinely exceeds 10 times” (Cincotta, 1998 in Pinto, 2012).

"By the mid-1960s, FHA’s foreclosure start rate was eight times the average in the 1950s and would continue at high levels in the decades ahead, with 3.4 million (one in eight) FHA homebuyers suffering foreclosure from 1975 to 2013" (Pinto, 2015).

That FHA foreclosure rate of 1 in 8 mortgages sounds predatory to me.