Subprime mortgage lenders are those who will create a mortgage in circumstances where a mainstream lender would refuse the loan. The usual circumstance is where the borrower is too great a risk to be allowed to obtain a standard mortgage (this is about a quarter of people in the US), but can refer to other things such as unusual loan structures.
Most subprime lenders were affiliates of the major lenders, and have disappeared now. They would not advertise the fact that they were subprime, but they would lend to people who could not obtain loans with prime lenders, and so they could charge higher fees and/or higher interest rates. Mortgages are not the only form of loans that can be offered on a sub-prime basis. Car loans as well as credit cards and other forms of loan can also fall into this category.
On the other end of the transaction, it was often not made clear to investors that the area they were investing in carried a significantly greater risk than usual. For example, in the 3rd quarter of 2007 subprime mortgages represented only 6.8% of the outstanding mortgages in the US, yet they amounted to 43% of the foreclosures begun. This concealment of the real risk for investors is one of the factors which caused the financial difficulties of 1008.
Typical borrower profiles which might exclude them from prime mortgages are such things as two or more late payments in the last 12 months, non-payment of a loan sometime in the past, bankruptcy in the last 5 years, poor credit score or merely insufficient credit history data.
Many major retail chains have a significant amount of their sales on subprime credit in some way.
Some companies specialized in creating loans which were deliberately structured in a way that the necessary repayments would be more than the borrower could afford. These were used to trick naive borrowers into signing for loans they would not be able to repay.
Subprime mortgage lenders are now far less common but mortgage brokers are still sometimes able to find them for clients.
For more relevant information see our Blog Post Subprime Mortgage Lenders [http://mortgage-reports.com/subprime-mortgage-lenders]
For more relevant information see our Blog Mortgage Reports [http://mortgage-reports.com/]
(sources include http://www.wikipedia.org)
Most subprime lenders were affiliates of the major lenders, and have disappeared now. They would not advertise the fact that they were subprime, but they would lend to people who could not obtain loans with prime lenders, and so they could charge higher fees and/or higher interest rates. Mortgages are not the only form of loans that can be offered on a sub-prime basis. Car loans as well as credit cards and other forms of loan can also fall into this category.
On the other end of the transaction, it was often not made clear to investors that the area they were investing in carried a significantly greater risk than usual. For example, in the 3rd quarter of 2007 subprime mortgages represented only 6.8% of the outstanding mortgages in the US, yet they amounted to 43% of the foreclosures begun. This concealment of the real risk for investors is one of the factors which caused the financial difficulties of 1008.
Typical borrower profiles which might exclude them from prime mortgages are such things as two or more late payments in the last 12 months, non-payment of a loan sometime in the past, bankruptcy in the last 5 years, poor credit score or merely insufficient credit history data.
Many major retail chains have a significant amount of their sales on subprime credit in some way.
Some companies specialized in creating loans which were deliberately structured in a way that the necessary repayments would be more than the borrower could afford. These were used to trick naive borrowers into signing for loans they would not be able to repay.
Subprime mortgage lenders are now far less common but mortgage brokers are still sometimes able to find them for clients.
For more relevant information see our Blog Post Subprime Mortgage Lenders [http://mortgage-reports.com/subprime-mortgage-lenders]
For more relevant information see our Blog Mortgage Reports [http://mortgage-reports.com/]
(sources include http://www.wikipedia.org)