Jun
08

Subprime Loans Helped Save Bank, but Many Borrowers Faced 18% Interest

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Among the mighty of New York City, Howard P. Milstein roams many corridors of power. He sits at the head of charities, has been the chairman of the State’s Thruway Authority and can find his family’s name chiseled onto the walls of hospitals.

He also has run the Emigrant Savings Bank since 2004 — “We saved it,” Mr. Milstein said — and expanded a vigorous program that made hundreds of millions of dollars in loans to people with bad credit ratings and no proof that they could pay the money back.

They did, however, have houses that were rich in equity for collateral, and signed documents agreeing that they would pay an interest rate of 18 percent if they fell behind, a circumstance that befell half of Emigrant’s subprime borrowers by 2009…

Subprime Loans Helped Save Bank, but Many Borrowers Faced 18% Interest

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