A new Center for Responsible Lending (CRL) study says that 2.2 million American households will lose their homes and as much as $164 billion due to foreclosures in the subprime mortgage market. The CRL claims that the study, "Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners," is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006. CRL's research suggests that risky lending practices have triggered the worst foreclosure crisis in the modern mortgage market, projecting that one out of five (19.4 percent) subprime loans issued during 2005-2006 will fail. "In the subprime sector, the most vulnerable borrowers are sold the most dangerous loans," said Mike Calhoun, CRL president. "At $164 billion, the losses from foreclosures could pay for the college educations of four million kids. For families who lose their houses because their loans fail, savings and economic security will be way out of reach." The report discusses a number of factors that drive subprime foreclosures -- in the majority of cases, borrowers receive high-risk loan features, packed into an adjustable rate mortgage with a low start rate, that is approved without considering whether the homeowner can afford to pay the loan after the rate rises. The CRL study projects that the cooling housing market will cause failure rates to rise sharply in many major markets. California, Arizona, Nevada, and greater Washington, D.C. are states singled out by the study as most likely to be especially hard hit. Beyond the increasing prevalence of subprime foreclosures being predicted by the study, the CRL also uses the report's findings to argue that black and Latino families are being unfairly targeted by subprime lending practices. The consumer rights group has been asserting this particular point in numerous studies released over the course of the past year. "Homeownership rates for minorities are up but so, too, is the cost of that homeownership," said Wade Henderson, executive director of Leadership Conference on Civil Rights. "We need rules to curb predatory lenders, but we also need prime lenders to step up for this expanding market of borrowers." Link: MSA projected foreclosure rates Link: Full report Link: Executive summary