New-wave mortgage lenders are in a quandary over what to call their business.
None of the labels now in vogue seems to fit the growing ranks of companies that cater to customers whom banks tend to shun.
"Subprime" became a dirty word when used-car lender Mercury Finance hit the skids. "Lending to the credit-impaired" smacks of political correctness. "Nontraditional A" doesn't exactly roll off the tongue. And "loans for fallen angels" is downright silly.
The old handles are even worse. "Hard-money lending" conjures up images of loan sharks. And "nonconforming" says what the lenders aren't-but not what they are.
Semantics, you say? Executives from the upstart industry beg to differ. The issue has triggered a full-fledged identity crisis.
"Who are we?" asked J. Terrell Brown, chief executive of United Companies Financial Corp., Baton Rouge, who heads a trade group that is grappling with that very question.
Mr. Brown ticked off a list of terms that don't work: "Not auto finance; not hard-money lending; not conventional mortgage lending."
Then he took a stab at a new moniker: "What we really are is a refinancing mortgage operation." (That hasn't caught on either.)
Mr. Brown's trade group, the Home Equity Lenders Leaders Organization, is so vexed that it recently formed a committee to come up with a name for the industry. "Home equity," it seems, is out of favor because it imparts nothing about the borrowers.
Some observers said they've seen it all before. "We're not supposed to say 'junk bonds' either," sniffed an analyst from one rating agency. "Now they're 'high-yield.'"
But language scholars viewed the name quest with approval.
"I can see why these creditors would be upset with 'subprime,'" said Richard Weiner, editor of "Webster's New World Dictionary of Media and Communications Terms." "It makes them sound inferior to bankers."
Mr. Weiner, who also helps companies come up with lingo, offered some alternatives. "Unrestricted funding" or "universal lending" might do nicely, he said, because they positively reflect these companies' open-door credit policies.
Any other ideas? Sorry, Mr. Weiner said: "People command big fees for this kind of brainstorming."
The committee might do well to follow the lead of Fannie Mae, which approaches the matter with simple clarity.
"Prime is what we buy and subprime is everything else," said Robert Engelstad, senior vice president for credit policy.
- Heather Timmons and Karen Talley