Stricter lending rules impact borrowers

Changes in the subprime market

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Bad news has been emerging from the subprime market every week, as the trade press reports one lender after another in trouble. As of April 16, 2007, National Mortgage News, a trade publication, counted 32 subprime lenders that had become "defunct" since early 2006. The good news is that many subprime lenders remain. According to the trade association of subprime lenders (NHEMA), there were 250 member firms in 2005. (NHEMA has since merged with the Mortgage Bankers Association, which is the mainstream trade group). The 32 failed firms accounted for less than 15 percent of the total volume of subprime loans. However, we don't know whether the firms remaining are still making loans, and if they are, at what terms. Mortgage brokers are in the best position to answer these questions because they intermediate a large proportion of all subprime loans. On April 10, 2007, the Upfront Mortgage Brokers Association (UMBA) surveyed its membership on these questions. (I am chairman o...