By Karen Petrou
In the wake of the great financial crisis, an axiom of consumer finance is that high-risk borrowers are disproportionately lower-income people. Indeed, the term “subprime” has become a virtual synonym for the lower-income households generally designated with low credit scores and, thus, the subprime sobriquet. However, a growing body of research demonstrates conclusively that subprime borrowers were not the villains of the mortgage debacle at the heart of the 2008 cataclysm: it turns out that prime borrowers behaving in subpar ways defaulted far more often than low-income households trying to become homeowners. Continue reading “The Low-Income High-Risk Myth”