D.C. Commissions Study of Subprime Mortgage Market

WASHINGTON - The District of Columbia has commissioned a study of the local subprime mortgage market to get a better handle on use of the risky, high-interest loans in the city.

D.C. officials have grown increasingly concerned about the impact of the crumbling subprime market nationwide.

Foreclosures have been rising, especially among subprime borrowers. Prospective homebuyers - even those with good credit - are now having more difficulty obtaining mortgages. And developers looking to fill new residential complexes are also feeling the pressure.

City council member Mary Cheh has introduced two bills - one targeting mortgage scams and the other requiring interest and payment disclosures well before closing.

"Based upon what they find, I might have additional legislation," she said of the study. "But I'm not waiting for it."

The new study will analyze the subprime loans, which are generally secured by homeowners with limited or poor credit history. The city's Department of Insurance, Securities and Banking recently awarded a $234,750 contract for the study to the Center for Responsible Lending, a nonprofit research group.

The study will also include work by The Urban Institute, The Reinvestment Fund, the National Community Reinvestment Coalition and the Capital Area Asset Builders. It expected to be completed by January.

Leslie Parish, a researcher with the Center for Responsible Lending, said focus groups, telephone surveys and data will be used to help show how prevalent subprime loans and other types of mortgages are in the city. The study will also look at ways to assist homeowners.

Parish said she expects the study will show that subprime loans are popular in the city. Due to the rising of cost of housing, she said, "people are really trying to stretch themselves to get into home ownership."

(Copyright 2007 The Associated Press. All rights reserved. )