Riskier Loans Making a Comeback with Private Firms

by 12 Jul 2011
After years as the lending market's undesirables, aspiring home buyers with less-than-stellar credit are being offered home loans again—with some of the same conditions and catches critics say tripped up subprime borrowers five years ago. According to analysts, a handful of private investment firms have started making home loans to borrowers who fail to meet banks' requirements, which got tighter post-crash and have largely stayed that way. And for now they are holding them on their books, which is novel. At least two, Athas Capital Group, of California, and New Penn Financial, which is owned by Shellpoint Partners, of New York, are also making jumbo loans, or loans in most parts of the country that exceed $417,000, as the federal government appears to be scaling its support of that market. The loans are designed to include borrowers with credit scores deemed low by banks' standards; they also have more-flexible requirements for proof of income. Banks have been too slow to extend credit to such people, the firms say, leaving otherwise responsible borrowers out in the cold—and potential profits on the table. "It's often a minor detail, why banks won't approve them," says Brian O'Shaughnessy, chief executive at Athas Capital. Read More from Yahoo Finance


  • by Ron Borg | 2/1/2012 1:41:58 AM

    The time to tighten in the underwriting reigns is when real estate prices are overheating. But of course, during those times, lenders only smell profits instead of seeing the writing on the wall. Now that the real estate bubble has deflated, smart players will see the opportunity presented to them and take advantage of the snail's pace of the money center banks. I applaud Athas and New Penn... I plan to get on board with New Penn and help myself to some of that low lying fruit!


Is TILA-RESPA a good or bad thing long term?