Subprime Loans Are Back—Now They're Called Nonprime Loans
Ben McLannahan reports on the growing prominence of the "nonprime" home-loan market. Nonprime loans are the new name for what was once called subprime loans. "The sector is on course to produce about $10bn this year — a tiny slice of America's $1.6tn overall home-loan market but one that's growing rapidly," according to McLannahan.
McLannahan specifically focuses on the work of Dan Perl at Citadel Servicing Corp, based in Irvine, California.
The way Perl and his peers see it, there's nothing shady or menacing about the business of subprime. On the contrary, they say, specialist lenders in this area are performing a vital service for the world's largest economy. For every comfortably off professional who could walk into a branch of Chase or Wells Fargo and get a home loan without any fuss, they argue, there are many more who would struggle.
The concern, as anyone who was alive in 2007 and 2008 might recall, is that nonprime loans are raising from the dead the same forces that led to financial collapse and the ruins of the Great Recession. The article provides in-depth insight into the debate that has emerged over the current nonprime market.