Subprime Lenders Become Loan Crisis Heroes

Subprime lenders got a lot more blame for the housing market crash than did government policies.

Subprime lenders were the bad guys! They lent to people who were bad credit risks.

What is subprime lending? It is lending to people who don’t conform to the standards set by Fannie Mae and Freddie Mac. People who are not an ideal credit risk. As a result, they have to pay higher interest rates and higher fees than a conforming borrower.

The Los Angeles Times reports:

PacWest Funding’s CEO watched in late 2007 as rival mortgage brokerages, banks and collaborators collapsed under the weight of the declining housing market.

Fearing his company would be next, Curtis Melone restructured his business to offer what he felt people needed most: help with their crushing mortgage debt.

Melone re-christened his company Green Credit Solutions, a loan modification firm dedicated to aiding people facing rapidly ballooning payments on loans many of them couldn’t afford in the first place.

The journey from subprime-era lender into purported troubled homeowners’ helper has been a common post-meltdown path in the mortgage industry hotbed of Southern California.

Loan brokers put out of work by the housing market collapse went looking for the next big thing — and found it in the mortgage modification business, which provided a way of cashing in on the problems they helped create.

Many of those firms, including Green Credit Solutions, have been shut down and are now facing state and federal investigations trying to prove that they bilked their customers.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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