With subprime lending on the rebound, a lot of mortgage originators are tempted to dip in the pool but fearful that the sorts of problems that emerged in the 2005 to 2007 era will reappear.
The question many are pondering: Is there a way to do subprime that's safe? It's what Jack Kahan, a residential mortgage specialist at Standard & Poor's, calls "responsible subprime."Subprime, of course, is a term that originally popped up to describe loans to borrowers with less-than-prime credit scores. As the last housing bubble inflated, however, the definition was expanded to include loans backed by high loan-to-value ratios, minimal documentation and other risky features.