Industry NewsMortgage

How lenders describe ‘subprime’ borrowers

'Non-prime,' 'credit-impaired' or just plain 'lousy risk'

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In the words of one researcher, subprime borrowers are "untapped potential." That description might reflect the fact that these borrowers have become an attractive opportunity during the robust housing market. Many subprime borrowers who would have had extreme difficulty obtaining a mortgage just a decade ago can do so far more easily today. More lenders are taking notice of this market. They don't want to discourage potential customers who don't qualify for prime, or "A," loans, so "subprime" has become the generally accepted term. But other terms are in use, and many of them aren't nearly as pleasant-sounding to potential borrowers. Regardless of what they're called, subprime borrowers can bring great benefits to lenders. These borrowers generally are less sensitive to interest-rate fluctuations than prime borrowers are because they're "more desperate for money," said George Yacik, VP of SMR Research Group, which recently published a study on the subprime mortgage market. Subprime ...