Prime Rate Credit

A well known, what we call “subprime” mortgage lender by the name of New Century Financial Corp has filed for bankruptcy and announced that it will be letting go thousands of employees and trying to cut expenses in other ways in an effort to make them more appealing to potential buyers. Apparently business isn’t going so well in the subrpime mortgage lending market?

With all the measures against predatory lending going on lately, and the negative publicity that many lenders have suffered through due to high foreclosure rates (which means they overestimated client’s abilities to pay them back, most likely in an effort to drum up more business), it’s really wrecked havoc on quite a few, previously solid mortgage lending institutions.

The company, which is said to be the second largest subprime mortgage loan lender in the US, like many other mortgage lenders who miscalculated risks, has seen some very volatile markets right now, due to poor decision making on the lenders end to assume responsibility for loan repayment, as well as increasing rates on ARM mortgage loans, which the unforseen spikes in interest rates have made it nearly impossible for some borrowers to make substantially larger payments as of late.

The housing industry hopefully will be on an upturn here over the next few months, and definitely over the next few years, as the mortgage lending and housing industry as a whole has fallen on some very hard times thanks to a poor economy as well as low consumer confidence and purchasing power. Come on economy - we need you to pick up the pace!