The future of subprime lending

October 19 2007 MarketWatch.com It will be back, but mortgages to riskier borrowers will look much different. Although "subprime" has become a four-letter word in the country's collective lexicon and no one is sure when the credit crisis that was spawned by a meltdown in the risky lending sector will ease, mortgage bankers say you can count on this: Subprime shall return. The next generation of subprime mortgages, however, will look much different than the loans issued during the height of the housing boom in the first half of the decade that are now causing so much trouble, mortgage professionals say. "So long as we have a policy position in this country of maintaining or further increasing homeownership rates there is going to be subprime lending," said Mark Fleming, chief economist with First American CoreLogic, a provider of mortgage-risk management and fraud-protection technology. "We have been very successful in increasing homeownership rates. One of the ways we've done that is by creating liquidity and offering credit to people who we traditionally wouldn't have 20 years ago -- the subprime borrowers."

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