ABSTRACT
This chapter focusses on subprime lending in non-metropolitan areas and its relationship to foreclosure. Subprime loans generally have higher rates of interest, smaller loan amounts and greater origination costs. In addition, subprime loans frequently carry higher origination costs as fees such as credit insurance are added to the loan amount upon initiation. Lenders justify the higher interest rates and fees by claiming that subprime borrowers represent a high risk population characterized by low credit scores and are not as 'credit worthy' as patrons of the prime mortgage market. Subprime loans are used for home purchases, to finance home improvements and to refinance existing loans. Research indicates that many of the most egregious predatory practices are found the home improvement and refinance sectors. The findings presented indicate that subprime lending is widespread and no part of the state of Minnesota urban or rural has been left untouched by the subprime lending boom and bust.
