Sub-Prime Lenders and Their Residential Mortgage Clients

Poor residential mortgage clients have in the past few years had a
swell time due to the low interest rates that propelled the housing boom to dizzying levels

The housing market is now however experiencing a slump due to rising interest rates which the Fed is using to reduce inflationary pressures.

This has cooled the market and has led to a lot of housing left unsold.

The most hit are the sub-prime lenders who -yes- specialise in poor residential mortgage folks. Sub-prime lenders are
mortgage institutions who lend money to people with bad credit ratings.

This group are high risk and the mortgage rates such ones pay are normally at a premium. This is becuase their high risk is
factored in.

Unfortunately during the housing boom, sub-prime lenders became careless and let down their guard. They did this by not
charging high a premium to factor in the high level of default. Many also did not foresee the present high interest regime in
place.

Many sub-prime lenders are therefore now paying the price.

But worse off is the housing market as foreclosure rates in this category is rising fast.

Unless rates were to fall, the situation may not improve but rather get worse.

It is therefore necessary that the regulatory bodies keep an eye out in the future for this can of behavior as one must not
forget the Savings and Loan debacle of the 1980's which cost taxpayers billions of dollars and sent many of its practitioners
to jail.

We just have to hope that relief may come soon, that is if the Fed decides to cut interest rates and those with poor residential mortgage are given a relief

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