The subprime lending market lends money to people who has less than perfect credit. It provides mortgages as well as other loans, at higher than usual interest rates. This is the market for many people who frind themselves in financial distress and need money to pay over extended credit cards or other debts which overburden the household budget. Unfortunately for these lenders, the outrageous profits they can make on these subprime loans can cause them to be greedy - they lend money to people who have no ability to repay the loans, or issue mortgages on homes which depreciate in value, or find themselves in the crosshairs of litigation by state Attorney Generals for deceptive marketing and lending tactics.
Mortgage Lenders Network USA recently announced it was closing its business. It grew from 7 employees in 1997 to 1,800 employees ten years later, lending money in the subprime marketplace. They encouraged mortgage brokers to push low variable interest loans to consumers who were unable to pay the loans once interest rates began to rise.
Ameriquest also closed its doors, laying off 3,800 employees with the collapse of the subprime market. Curiously, Ameriquest shut down shortly after its former CEO, Ronald Arnell, was appointed by President Bush to be the ambassador to the Netherlands. Ameriquest's demise may also be related to the $325 million settlement with 30 states' Attorney Generals over deceptive marketing and lending.
Subprime lenders are continuing to seek consumers to whom they can lend money, although the use of adjustable rate mortgages may not be as popular as in prior years. Enough low income consumers have seen the pain of home foreclosures through their friends and neighbors to cause them to avoid those mortgages. If you have a subprime mortgage and you are unable to make your mortgage payments, consult with an attorney soon to learn your about your options to protect your property from foreclosure.