Oklahoma No. 2 in pricey mortgages

Oklahoma had the second-highest rate of high-interest mortgages in the nation last year, a recent survey has found.

The Consumer Federation of America estimated that 44.3 percent of all mortgages in Oklahoma were "subprime," or at least 3 percent higher than the prime rate. About 18 percent of home mortgages were 5 percent above prime, and 2.6 percent were 7 percent above prime.

The prime rate, or the base rate on loans posted by at least 75 percent of the nation's 30 largest banks, currently stands at 8.25 percent.

Allen Fishbein, director of credit and housing policy at CFA, said the causes of the high rates in Oklahoma are unclear.

"There are more people with lower credit scores in some areas than in others, but given the size of the variations between states, that's probably not the whole story," he said.

Mississippi had the highest rate of subprime mortgages, with 51.8 percent. The third-, fourth- and fifth-highest states were Alabama with 41.6 percent, Nebraska with 41.5 percent and Louisiana with 40 percent.

By contrast, the national average for subprime loans was 26.5 percent, and the lowest-ranked state was California, with 16.2 percent.

Tom Bennett, chairman and CEO of ONB Bank & Trust Co. in Tulsa, said his bank issues relatively few subprime loans.

"Typically, these borrowers are people with bad credit scores or who have declared bankruptcy," he said. "These people typically carry a greater risk."

He said he is unsure what caused the high rates.

Fishbein suspected the high numbers were at least partially caused by greater numbers of lenders targeting people with bad credit, predatory lending and a lack of awareness among some consumers that loan rates can vary widely.

"Oklahoma has some of the highest levels of subprime lending in the country, which may reflect the extent to which local mortgage markets are competitive and transparent and not simply variations of creditworthy borrowers," he said.

The study was compiled from data obtained from lender reports submitted under the Federal Home Mortgage Disclosure Act. About 4.9 million mortgages in 300 metropolitan areas were included.

Tulsa ranked 39th among the metro areas, with 43.6 percent of all home loans at least 3 percent above prime. Oklahoma City ranked 50th, with 41.9 percent.

The top five metro areas were all in Texas, with Brownsville at 57.3 percent, McAllen at 56.4, El Paso and Lubbock tied at 55, and Longview at 51.9 percent.

CFA's study also noted that African Americans and Hispanics were significantly more likely to receive a subprime loan. An estimated 23 percent of all loans to whites were subprime, compared with 32.6 percent for Hispanics and 48.9 percent for African Americans.