The Death of Subprime Lending

Over the past few days I have received so many low FICO applications its a bit worrisome. I’m wondering if they are just going from lender to lender looking for something because I can’t find anything for them. With no money in the bannk, a recent bankruptcy and lots of bad accounts, none of the remaining subprime lenders are willing to entertain the scenario. With the recent implosion things are now really tight. I can’t find a 100% subprime loan anymore. Forget lower documentation now the only option is to go full doc. The maximum loan to value I’m able to find is 90% and the rates are pretty high.

I sat down with a seasoned representative from a very large bank yesterday. He said he’s only able to do Alt-A and subprime with 20% down. He basically said the pie has shrunk over night and things will get really nasty for him. I believe him becuase Wells Fargo shut down their subprime division last week.

Thank goodness for FHA and the MyCommunity loan program. Actually, I’m glad I kept up on these programs the past few years when everyone preferred the easy subprime route.

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