The Subprime Lending Business Survives, Even Thrives

Time 
March 11, 2010
Gandel, Stephen

While many believed the financial crisis would put a stop to subprime lending, the industry is still flourishing. With big banks pulling out of the subprime niche, small lenders have been able to boost their market shares and charge higher interest rates, increasing their profits. Chris Kukla of the Center for Responsible Lending remarks, "Large banks have at least temporarily backed out of this business. But in the fringe financial business there are plenty of firms that are willing to take advantage of subprime borrowers' difficulties accessing credit." Borrowers with poor credit continue to obtain auto loans and credit cards, but they are finding it more difficult -- if not impossible -- to secure home loans. Mortgages offered by the FHA to borrowers with credit scores of 619 or less fell to $8.3 billion during the last seven months of 2009 from $39 billion during the same period in 2008.
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