Why Subprime Mortgage Lending Is Ready for a Comeback

The widespread return of the subprime mortgage business will be the big event for the mortgage industry in 2015.

At first glance, this may seem like one of the more wild and outrageous predictions among the wide spread prognosticating that happens this time of the year. But it’s actually not that crazy, given how the market turned out in 2014.

As origination volume has been shrinking, lenders have been moving down the credit scale. In fact, 31% of closed loans in December 2014 had an average FICO score below 700, according to a sample of Ellie Mae loan data. In 2012, that figure was 21%. And the segment of FICO scores that experienced the biggest increase during that time was the pool of borrowers with scores between 621 and 659.

The subprime market has already seen some recent signs of life, with both lenders and aggregators dipping their toes into the market. And don’t forget the lenders out there willing to originate loans that don’t meet the qualified mortgage threshold. More here 

unnamed (15)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s