For example, among the mortgages originated from 2004 to 2008, almost 25 percent of those in low-income neighborhoods were foreclosed on or in serious delinquency as of 2011, more than twice the rate of mortgages originated in higher-income neighborhoods. Higher-income households had also taken on debt and were affected by declines in asset prices.
But these households entered the recession with a larger wealth buffer and higher incomes, so they generally were still able to service their debts. The sharp rise in defaults and delinquencies put extraordinary stress on most households’ finances, intensified the financial crisis, and exacerbated the effect of the initial economic shocks.