Their neighbors may suffer as well, as geographically concentrated foreclosures tend to reduce property values in the surrounding area. The recent problems in the subprime mortgage sector With this background in mind, I turn now to the recent problems in the subprime mortgage sector. In general, mortgage credit quality has been very solid in recent years.
However, that statement is no longer true of subprime mortgages with adjustable interest rates, which currently account for about two-thirds of subprime first-lien mortgages or about 9 percent of all first-lien mortgages outstanding.