Sub-prime lending shake-up

In case you were not aware the sub-prime market is being shaken up. Some aggressive lenders in this category have already gone out of business and the remaining ones are tightening their guidelines. Here is a timely article:

Bloomberg.com: U.S.: “Underwriting standards for sub-prime loans have been too low for at least a year, resulting in loans being issued to borrowers who have little chance of paying them back, Shaughnessy said. That will hurt the insurance companies, pension funds and asset- management firms that are holding some of the U.S.’s $6 trillion of mortgage-backed securities in their portfolios, he said. “

Sub-prime Lending (Wikipedia.org)
Sub-prime lending can be defined as lending to borrowers who have less than ideal credit. Such borrowers will pay a higher interest rate due to their increased risk of not repaying loans, based on credit history, low income, or other criteria used by lenders.

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