Why Subprime Mortgage Lenders Are In Trouble

In a recent BusinessWeek.com article, an industry analyst asserts that one reason why the subprime mortgage market has gone into a steep decline is "[a] sudden but little-noticed shift in lenders' strategy that occurred at the end of 2005: Lenders went from competing for customers on price (by lowering rates) to competing for customers on easy terms (by lowering lending standards). As a result, the conclusion is that "[t]he subprime loans that were originated in 2006 that are turning out to be shockingly weak."

The expectation is that "[t]he pool of foolish loans they made in 2006 will continue to haunt them for some time to come."

To read more, see
Why Subprime Lenders Are In Trouble
(New analysis suggests that subprime lenders lowered their lending standards last year as they competed for business)

For other BusinessWeek.com articles on the troubles in the subprime mortgage market, see

• Subprime Time Bomb and
• A Painful Hiss from the Subprime Balloon

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