Four years ago, in response to numerous reports of the growth of predatory lending, both locally and nationwide, the Massachusetts Community & Banking Council (MCBC) – whose Board of Directors has an equal number of bank and community representatives – commissioned a study of subprime refinance lending in the city of Boston and surrounding communities. The resulting report, Borrowing Trouble? Subprime Mortgage Lending in Greater Boston, 1999, was the first detailed look at subprime lending in the city of Boston and in twenty-seven surrounding communities.
This is the fifth report in the annual series begun by that initial study. Geographic coverage has expanded to include data on subprime lending in 108 individual cities and towns. This is the first year that the report has examined subprime home purchase loans in addition to subprime loans made to refinance existing mortgages.
Responsible subprime lending can provide a useful service. Subprime lenders can do this by making credit available to borrowers otherwise unable to obtain it, while charging somewhat higher interest rates and fees that bear a reasonable relationship to the increased expenses and risks borne by the lender. There is, however, considerable evidence that much or most subprime lending does not satisfy this definition of responsibility
