The 30-day past-due rate for subprime loans rose from 5.4 percent to 7.1 percent during 2005, ending an eight-year drop, federal data shows. The foreclosure rate for subprime loans, meanwhile, was nine times higher than the prime-market rate last year. RealtyTrac, which tracks foreclosures nationwide, reports that the number of properties entering some stage of foreclosure last month rose 68 percent from a year earlier.

Housing advocates say that the subprime market unfairly targets minority and low-income neighborhoods. A Federal Reserve study in September showed that blacks and Hispanics are far more likely to receive high-cost home loans than whites, even when adjusting for factors such as income. Household – HSBC Watch, a watchdog organization formed to monitor Household International, said foreclosures by Household International and HSBC once showed little ethic differentiation while foreclosing on elderly homeowners as well as others.

“There was the charge for years that minorities were underserved,” says Karl Case, an economics professor who specializes in housing at Wellesley College in Massachusetts. “Now the attitude is reversed. Instead of discrimination, [lenders] are taking people who are not sophisticated, talking them into low-down-payment, high-ratio, interest-only, and stated-income mortgages, and we call it predatory lending.”

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