The Federal Reserve Bank of New York has put together an excellent map and an extensive amount of data related to subrime and Alt-A loans across the country. There’s a lot to cull through and digest here. But perhaps the most startling bit of info is that the average credit score for Minnesotans with a subrpime loan is 623. That’s a score considered reasonable and even “good” by most lenders.
In fact Lending Tree says anything below 620 is subprime, and a score between 620 and 650 is “good.” And BankRate also considers a score below 620 subrpime. Of course credit scores have always been an inexact science and questionable standard for determining one’s payment ability. One late auto payment can cause a credit rating to plummet 98 points. Still, however broken it is, a FICO credit score determines what type of loan and interest rate a borrower receives.
Minnesota isn’t alone in having a credit rating for subprime borrowers that isn’t exactly subprime. Eleven other states have an average credit score for subprime borrowers that is above what lenders consider to be the standard cutoff point for subprime loans. Economic and housing experts have estimated that 55 percent of subprime borrowers qualified for a prime loan with lower interest rates and no resets in the first place. And it just so happens that Minnesota and 11 other states house the majority of those borrowers.
What’s also still so baffling, no matter how many times you hear it or see it, is the fallout that continues to unfold from that near-decade-long pattern of predatory lending and greed. Here’s how the numbers shake out in Minnesota, according to the Federal Reserve Bank of New York’s most recent info from December 2007. We still have years to go before phase one of the mortgage meltdown is complete.
* Total number of housing units in Minnesota: 2,065,946
* Number of subprime loans at end of 2007: 53,479
* Number of those that are current on payments: 27,902
* Number that are 90 days past due: 3,688
* Number in foreclosure process: 4,563
* Number resetting in 0-5 months: 5,923
* Number resetting in 6-11 months: 8,268
* Number resetting in 12-23 months: 6,752
* Number resetting in 24+ months: 2,050