Bad Credit Home Loan Woes Likely to Continue
Storm clouds will persist over the subprime, or bad credit mortgage market, according to a report released today from Aite Group LLC.
The Boston-based firm focuses on business, technology, and regulatory issues and their impact on the financial services industry.
In this case, they are studying the impact of bad credit home loans on the Massachusetts mortgage lending landscape.
The conclusion? We haven’t seen the worst of it yet.
Although it is still too early to know how all the issues will play out in the subprime mortgage market, Aite Group said it believes that likely scenarios include pressure from all sides that will lead to:
- Much tighter mortgage underwriting
- Lenders continuing to exit the subprime market
- Opportunities for any home loan lender committed to the market and to standard, fixed-rate lending products
- Regulators and legislators acting on both state and federal levels
“There is very little debate that many mortgage industry practices have created ill effects for lenders, consumers, and the economy as a whole,” Eva Weber, the Aite analyst who authored the report, said.
“The question now is when the fallout from these practices will dissipate. The unfortunate answer is that things may still get worse before they get better.”
Indeed, as no money down mortgages and other exotic loans become a thing of the past, analysts can only help but wonder how long before the slump ends and the market returns to normalcy.
SOURCE: Boston Globe