The Cost of Bad Lending in the United States
Updated August 2010
The foreclosure epidemic started with bad subprime loans, but predatory lending continues to have a negative impact on all kinds of consumer debt. Below you can see a snapshot of foreclosures in and the high price of abusive overdraft fees and kickbacks on car loans.
Congress has passed financial reforms that will encourage honest competition among lenders and help make consumer loans safe and fair. Find out more about the benefits of Wall Street reform, including the new Consumer Financial Protection Bureau, at www.responsiblelending.org/cfpb.
Mortgage Delinquencies and Foreclosures
2010 State foreclosure projections:
State foreclosure projections (2009-2012):
Total state foreclosure starts (Q1-2008 through Q1-2010):
Total state foreclosure sales (Q1-2008 through Q3-2009):
Total state foreclosure inventory (end Q1-2010):
Total state past due mortgages (end Q1-2010):
Annual change in foreclosure starts in the state (ending Q1-2010): %
Change in state foreclosure starts (Q3-2006 to Q1-2010): %
U.S. lost home equity wealth due to nearby foreclosures, 2009-2012: $1.9 trillion
Number of homes in state experiencing foreclosure-related decline:
Average loss per home affected: $
Overdraft Loan Costs
U.S. cost of overdraft lending: $23.7 billion
U.S. share of overdraft loan fees from debit card transactions: 44%
U.S. median amount of credit extended in debit card overdraft loan: $16
U.S. median amount of ovedraft loan fee: $34
Cost of dealer overcharges on auto loan interest rates – all cars: $ billion
Cost of interest rate overcharges – new cars: $ billion
Cost of interest rate overcharges – used cars:  $ billion
Sources and Notes
Mortgage Bankers Association, National Delinquency Survey
Hope Now Alliance, State Loss Mitigation Data June 2009, available at http://www.hopenow.com/industry-data/State%20Loss%20Mitigation%20Data%202009%20Jun%202009.pdf
GAO, Characteristics and Performance of Nonprime Mortgages, GAO-09-848R (July 28, 2009) available at http://www.gao.gov/new.items/d09848r.pdf
Center for Responsible Lending, Soaring Spillover: Accelerating Foreclosures to Cost Neighbors $502 Billion in 2009 Alone; 69.5 Million Homes Lose $7,200 on Average (May 2009) available at http://www.responsiblelending.org/mortgage-lending/research-analysis/soaring-spillover-3-09.pdf
Federal Financial Institutions Examination Council, 2006 Home Mortgage Disclosure Act data. The federal regulators that preempted state consumer protection laws include the Office of the Controller of Currency, Office of Thrift Supervision and National Credit Union Administration
Center for Responsible Lending, Overdraft Explosion: Bank Fees for Overdrafts Increase 35% in Two Years (October 2009). Costs by state estimated by dividing a national cost of $23.7 billion in overdraft fees proportionally by population.
Center for Responsible Lending, Phantom Demand: Short-term due date generates need for repeat payday loans, accounting for 76% of total volume (July 2009).
Payday data is from most recent annual report from state regulators. Number of payday lenders, loan volume, loans per store, and average loan size from CRL’s Phantom Demand report. If data are not reported by state regulator, loan volume is estimated based on national data and total fees are estimated by multiplying the typical finance charge in that state by the total loan volume.
Center for Responsible Lending, Auto Dealers’ Lending Abuses Cost Billions (October 2009)
© 2010 Center for Responsible Lending