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

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.