Will subprime mortgages make a comeback?

September 10, 2014

Six years after the housing bust, the housing market is going through a lending drought.

Mortgage-qualification standards are at their tightest levels since the 1990s, The New York Times reports. One expert goes as far as describing the industry as “using rules that were written for Ozzie and Harriet,” which means standards assume the typical home-owning family consists of one breadwinner with a stable salary, and has amassed or inherited enough savings for a downpayment. But this cautious approach hinders the economy through fewer new-home sales and less spending on furnishings, landscaping, renovations, and other consumer spending. Some ask, is it time for a subprime-lending industry renaissance?

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