Inside
SWIMMING WITH SHARKS
IN AN ENVIRONMENT of steeper fees, tougher collections, and bigger profit margins, it is the risk-taker who is likeliest to make the biggest splash. Meet a few of the subprime market's tightrope walkers. Page 4A
BITS, BYTES, and RATES
AS CREDIT STANDARDS are reviewed, revised, and reconfigured, technology is emerging as a key element in the underwriting phase. The new standards are reshaping the mortgage business. Page 5A
GRADING ON THE CURVE
STANDARD & POOR'S, which grades the credit risk of most subprime mortgage securities, has developed a statistical model for precisely measuring the likelihood of default on a given loan. Page 6A
POINT/COUNTERPOINT
THE TIME IS RIGHT for diversification into a rich market with myriad niches and a seemingly endless supply of borrowers, writes Joel Furst, senior vice president of New Jersey Mortgage and Investment Corp. Page 8A
OVERZEALOUS LENDING to borrowers who cannot repay likely will result in a downward spiral of charging ever-higher fees to a deteriorating customer base, argues Karen Shaw Petrou, president of ISD/Shaw. Page 9A
SHOW ME THE MONEY
MAKING THE LOAN is only half the battle. Sometimes a borrower can't make mortgage payments simply because of financial strife; sometimes it's because he just bought a new Mercedes. Such are the war stories from servicing agents. Page 10A
Q&A
SECURITIES likely will see as much as 30% in growth this year as borrowers gravitate toward home-equity loans for consolidating their debts, Prudential Securities managing director Len Blum predicts. Page 11A
WHERE CREDIT IS DUE
A CALIFORNIA LENDER has turned to credit scoring in underwriting mortgages, reaping substantial profits while helping borrowers on the bubble. Page 12A
