douglas_banker

Subprime Borrowers Causing Upside Surprise: What's Happening Here?

I just don't get it! All these ill informed comments about an industry few including you know little about.
Lets start with the avg. income of a nonprime borrower, $71,000.00. Avg age 41, avg time on job 5 years and avg time in thier home 5 years. This is according to SMR which publishes industry statistics annually and the Mortgage Bankers Association.

The nonprime borrower has an avg credit score of 618! A just miss from prime score of 620. I don't know why the media gets so much from publishing such uniformed information. Nonprime lenders for the most part make good loans to people who can and will repay. Which is why all those nonprime loans of 2000 to early 2005 are performing better than expected. Now later 2005 and 2006 both borrowers and lenders stretched their appetites and went into an unknown area with option arms and other exotic products. In the meantime greedy borrowers using thier homes a ATMs continued to pay for their lifestyles by borrowing. Now the market slows and the equity is gone and we have panic party.

Quick lets throw gasoline on it by printing information that the sky is falling!! Lets call this what is really is -Chicken Little syndrom, but hey is the sky really falling? Maybe just weaker lenders being weeded out by a tightening market.