http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXkzNTkmZmdiZWw3Zjd2cWVlRUV5eTcxMDkyNjcmeXJpcnk3ZjcxN2Y3dnFlZUVFeXky"By 2004, at least a third of mortgages issued in nearly all of Paterson and Passaic were subprime. In much of Haledon and Prospect Park, between 22 and 33 percent of home loans were untraditional. And 16 to 22 percent of loans were subprime in stretches of Clifton, Lodi and Garfield.
The easy availability of money -- and profits from the loans' high interest rates -- led to abuses. National fraud reports for mortgages increased by 1,411 percent between 1997 and 2005, totaling almost 83,000 during the period, the federal Financial Crimes Enforcement Network found. In the first three months of 2006, cases were up by more than a third from the previous year.
About two-thirds of frauds were due to misstated documentation of a borrower's ability to afford a loan. Even the properly executed ones were not in many homeowners' best interest, as the products came with suddenly increasing interest rates. Eventually, many of these mortgages overburden homeowners.
"You might as well have handed someone a ticking time bomb," said Schloemer, of Responsible Lending.
At the end of 2006, about 13 percent of subprime loans in New Jersey were past due, according to a Mortgage Bankers Association survey. Mary Johnson of Consumer Credit Counseling Services of New Jersey, a Cedar Knolls nonprofit that sees 3,000local clients annually, says her agency is pressed to help those on the brink of foreclosure.
"We are dealing with people who are living in their cars," Johnson said. Her agency refers these clients to homeless services, but Johnson has found that the programs are too overwhelmed to provide relief. "My husband and I had been urged by neighbors, relatives, co-workers, friends to get one of these creative mortgages about four years ago. Our bottom line was that if we couldn't afford it, we couldn't afford it, and that there HAD to be a time down the road when any creative mortgate would catch up. To think that the pursuit of the American Dream has led to an increase in the homeless population is quite ironic.
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