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Predatory lending or overreaching? Gen X's role in downturn

January 4, 2013 @ 7:56 am (Updated: 9:48 am - 1/4/13 )

During the housing crisis, Generation X made up the largest percentage of households in foreclosure - particularly the well-educated and affluent members of this generation, according to a new study by the Federal Reserve Bank of St. Louis, "The Foreclosure Crisis in 2008: Predatory Lending or Household Overreaching?"

Generation Xers who had an average household income of $59,500 and 14.8 years of education were found to have the highest rate of foreclosures, with more than 1 in 10 in foreclosure, according to the St. Louis Fed's research.

The study also found these trends among those with the highest foreclosure rates during the housing crisis:

  • Homeowners in foreclosure tended to pay 25 to 33 percent more for their homes and they tended to earn about 10 percent less than homeowners not in foreclosure.
  • The median mortgage in foreclosure had a loan-to-value of about 96 percent, whereas the median mortgage not in foreclosure had a loan-to-value ratio of about 65 percent.
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Comments (8)


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  • Concerned US Citizen wrote...
    Educated?
    January 5, 2013 5:26 am
    They were financial idiots just like our country spending more than we make. If you think the housing crisis was bad wait till Obama and the Democrats bankrupt our nation and it's coming soon to a theater near you!! If you think congress has gotten the message think again. Just look at the 62 billion pork filled Sandy Relief Bill that Harry Reid and the Democratic controled Senate sent to the house. Is it any wonder Bohener didn't put it up for a vote. Back to the housing crisis. I bought a house in Phoenix and watched these young kids buying the biggest houses in the development when I bought the smallest with 20% down. Now I am the only original owner on the block and they are all gone. I don't know what schools they got their education from but they certainly didn't learn basic math and I don't even feel sorry for their stupidity.
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  • Snout wrote...
    Gen X
    January 5, 2013 4:38 pm
    They are the first generation that really had everything handed to them and didn't have to deal with consequences. And stop calling it "predatory" lending. It was a combination of greedy homebuyers who lacked the life skills to be adults, greedy politicians who wanted to make sure that everybody including the clueless "owned their own home" in exchange for votes and bankers just following the guidelines set out for them so that they could take care of their families.
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  • O-town listener wrote...
    finally..
    January 5, 2013 5:08 pm
    Where is everybody that was yelling about how this was all the bankers faults? About time we show the bad decision making on the part of the Gen X'rs - you can't have a big house, game systems, big screen tv's, nice cars, etc. etc. and put it all on some kind of credit. Sure, the bankers had their role - definately should have weeded some of these folks out as bad credit risks, of course if that had happened then folks would be yelling at the bankers for stopping the American Dream. But this was less about predatory lending and more about the gimme gimme gimme attitude this country has these days.
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  • SickofSeattleite wrote...
    @ o-town
    January 6, 2013 8:48 am
    not every genx fits your mold...i don't have any of those things and work 3 jobs to pay for my house i am underwater 150,000...f the bank. They can have their stupid house back. The fact is...i did pay what it was worth already. So i am not stupid, i was taken advantage of by our govt and our banks. Shame on me once. lesson learned. Even you old fools make mistakes too. I don't take any hand outs from uncle sam and i qualify for several. You want to blame someone for America's problems blame our parent parents...they had it so bad they spoiled their kids which then turned into liberal morons destroying our county.
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  • rational wrote...
    Snout
    January 6, 2013 7:59 am
    You are correct...I did find it interesting that Tom Kelly omitted any mention of government involvement in the financial meltdown when it was the primary participant.

    In fact, when one looks at the economic mess the US is in (and Europe for that matter) it is government actions that has lead to the whole thing. And despite this fact the left wants to make government even more powerful, and give it an in into even more of our lives. Fools.

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  • SickofSeattleite wrote...
    when the housing market is inflated artifically
    January 6, 2013 8:48 am
    so the banks could rake in profits on first time genx home buyers...that's called predatory lending....not to mention it is the govt fault...they are the ones that forced the banks to make those faulty loans in the first place. the real blame falls to our ever growing spending govt. Wait till they handle your health care....
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  • Rangerhawk wrote...
    "Parasitic Overreaching"
    January 7, 2013 6:28 pm
    Generation e"X"tasy has arrived and has taught generation "Y" how to vote for more entitlements including housing as well. The not-so-Brave New World has arrived, and it's raiding the fridge along with our wallets!
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  • AJMakar wrote...
    Predatory lenders
    January 8, 2013 2:49 pm
    The case that the government FORCED this lending is just plain nonsense. IT is refuted by the following: 1. Banks have proven that they are more than adept at avoiding regulations they don't like. That is why HAMP and similar programs failed. 2. CRA may have encouraged lending to red-lined areas,but that doesn't explain the banks making the amount of loans. A lot of these loans, maybe even the majority, were in non-redlined areas. The banks made these loans because the derivatives market created a demand for risk. Plain and simple, Wall Street created a regimen that made risky loans extremely profitable. More profitable than standard loans. The demand for risk was met by the banks willingly searching out sub-prime loans as a matter of policy. 3. Banks and mortgage companies not only paid increased bonuses for sub-prime loans, they actively sent their loan officers to training so they could rope more people in and maximize the amount of sub-prime loans being made. Contrary to the their claim of being forced, they were willingly working at turning out these loans. 4. Consumers looking at lower priced homes were steered into higher price homes. Additionally, loan officers were trained to steer consumers away from traditional mortgage instruments, pointing them into riskier ones. The loan officers were rewarded with bigger bonuses. 5. Look who profited. Banks were not poor victims of government regulations. They were more than willing participants. If these were loans that the did not want, then why pay bigger bonuses for them? Why train people to maximize them? The lending practices were very predatory.
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