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Thanks to Growing Pool of Subprime Borrowers, Subprime Mortgage Issuance is Back

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You remember that post yesterday about how FICO scores now put one-in-four Americans in the subprime loan category? Well, guess who benefits from that?

We ran across an article from American Banker a bit ago (sorry, subscription required) observing, "Subprime Lending Starting to Attract Attention Again." And is it really any wonder? After all, as Rick Baldwin, who runs Excelsior Management Group, a mortgage lending firm now originating highly profitable subprime loans which reportedly carry yields of 12% with five points, tells American Banker, "Thanks to this downturn, the job losses and everything else, we have more nonprime borrowers than ever before." It's a boom in the subprime borrowing pool!

Of course, the volume subprime loan origination remains a fraction of what it was during the peak, but the profit margin on what subprime loans are originated is extraordinary.

Oh, and this is interesting: Remember Angelo Mozilo, founder of Countrywide Financial Corp.? His son, Mark Mozilo of Calcap Advisors is among those moving into the non-prime lending category (Mozilo tells American Banker he prefers "non-prime" to subprime: ""We're making loans to borrowers who can't get credit because they're an investor, or they own too many properties and a bank won't touch them," Mozilo said. "There's this growing segment out there of people who won't or can't qualify."").

""I see other people looking at doing what I'm doing," Mozilo said. "But the nice thing about it is that banks won't be getting in this anytime soon," which leaves the business wide open for the nonbanks."

Don't you just love it when a plan comes together?
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