Mortgage Rate News

One of the biggest stories of 2007 was the subprime lending crash. And, for now, it appears that mortgage lenders are changing their shoddy lending practices. The Boston Globe is reporting that subprime lending has dropped dramatically since the crash:

Lenders sold about $26.3 billion of subprime loans in the third quarter of 2007, down more than 80 percent from the roughly $139 billion sold at the peak of the boom in the fourth quarter of 2005, according to Standard & Poor’s.

Of course, this doesn’t mean that the mortgage crisis is over. Many people are still going to be affected by the subprime lending crash. Whether it will be harder to get a home mortgage loan going forward, or whether they will, in fact, find themselves in foreclosure due to a re-setting ARM, the subprime lending crash has not ended the problems that are surfacing from the era of easy credit.

Indeed, the fact of the matter is that many of the “fixes” offered toward the end of 2007 will do nothing of the sort when it comes to solving the underlying problems of our mortgage industry and how business is done. In fact, even though the subprime lending industry may have all but disappeared for now, I’d be very much surprised if it doesn’t make a comeback. The excuse that you can charge very high rates to those with questionable credit is just too potentially money-making to pass up.

With the subprime lending industry likely to return, the Boston Globe points out that states need to figure out how to regulate subprime loans. After all, the measures put into effect recently don’t completely solve the problem of people who should not be getting loans in the first place being approved, although the Fed’s modification of Reg. Z does address the problem to some extent.

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subprime lending industry, mortgage crisis, lending industry