Markets & Economy

High-interest loans re-emerge

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Loans to borrowers with less-than-stellar credit that are not sponsored by government entities could be trickling back into the market, with the CEO of a nonbank in California saying that he "absolutely" expects to securitize nonprime mortgages within the next 12 months, Inside Mortgage Finance reported. In June, Irvine, Calif.-based Citadel Loan Servicing Corp. expects to make about $6 million in loans to borrowers with subpar credit that carry interest rates more than double the average rates on 30-year fixed mortgages, according to Inside Mortgage Finance. But unlike many of the subprime loans that helped bring the financial system to its knees, the maximum loan-to-value ratio for a loan is 75 percent, Inside Mortgage Finance reported. And though the loans interest rates are sky-high by today's standards, they are well below those associated with many subprime loans during the housing boom. Still, the lender's emergence -- Citadel was formed just two month ago -- appea...