What Has Happened to Subprime Lending?

Subprime lending was a very prosperous business in the during the housing bubble that lasted from the early 1990s until 2005.  Subprime lenders made a great deal of money in fees and the interest individuals had to pay.  The closing cost fees that subprime lenders charged were quite outrageous; sometimes three and four times the normal closing cost fees.  Lenders also instilled interest rates in excess of 10% on almost every mortgage that made it through the application process.  Now that the truth is out about subprime and the lending practices, does it still exist today?

The answer is yes, subprime lending does continue to exist today.  Obviously it is not nearly as profitable as it once was because the housing market has fallen off a cliff.  Many of the subprime borrowers that once strongly desired a home no longer have that desire.  They would much rather rent or live with someone else who can help them split housing payments.  Some subprime borrowers are even moving back in with their family so they can remove the monthly expense of a mortgage payment.

With this being the case, subprime lenders are struggling to find borrowers.  It used to be the case that everyone was knocking down the doors of these lenders to get a mortgage at any rate.  Now that the mortgage rules have tighten and the American public is aware of the meltdown that subprime mortgages caused, things are very different.  There have been over 340 mortgage lenders that have closed their doors and most of it is due to the subprime mortgage crisis that we will never forget.