Subprime mortgage volume on the rise

Subprime mortgage volume has increased recently however the types of Subprime mortgage loans being funded now are not the same type of Subprime mortgage loans funded prior to 2008.  Based on the information provided by Equifax and their National Consumer Credit Trends Report (which places a Subprime label on a borrower if they have a 620 credit score or below), Subprime mortgage volume increased from January 2015 to October 2015 – 312,000 new mortgage loans were originated with a total volume of $50.7 billion.  That’s nearly a 45% increase compared to the same period in 2014.

The biggest difference between these Subprime mortgage loans and the Subprime mortgage loans pre-2008 is the lenders underwriting standards for the new mortgage loan.  Pre-2008 lenders rarely if ever verified income with employers and he IRS however today it generally happens on every file; especially those with sub 620 FICO scores.  Another area that makes these Subprime mortgage loans different is the lenders appraisal standards and background checks lenders complete when they receive a new mortgage application.