Subprime Mortgage Lenders Form Their Own Trade Group

By Timmons, Heather | American Banker, November 29, 1995 | Go to article overview
Save to active project

Subprime Mortgage Lenders Form Their Own Trade Group

Timmons, Heather, American Banker

Companies that specialize in mortgage loans with lower credit quality are forming a trade association - a sign that the once borderline business is coming of age.

Subprime lending, as it is called, has delivered surging profits to the specialists in the last few years, and their success has attracted large numbers of conventional lenders to the niche in the past year.

But the veteran subprime lenders see their interests as diverging from those of conventional mortgage companies with broad product lines. Most are members of the Mortgage Bankers Association and the National Home Equity Lending Association.

In a meeting last week, several of the companies discussed the direction they want to take, said acting chairman Gary Judis, who is also president of Aames Financial Corp., a Los Angeles-based subprime lender.

The organization, which is operating tentatively as the Home Equity Lenders Leadership Organization, or Hello, will focus on the special needs of the largest subprime loan originators.

Some of the largest MBA members also formed a separate lobbying group earlier this year because they saw their interests as separate from those of the general MBA membership.

Money Store and United Companies Lending Corp. of Baton Rouge, La., are among lenders involved in the new B and C group, Mr. Judis said, as well as several companies from the Wall Street side of the subprime lending equation. Oppenheimer & Co., Prudential Securities, and Bear, Stearns & Co. are among those interested, he said.

Prospective members said Hello's formation is a direct result of the Home Ownership and Equity Protection Act, which increased the Truth-in Lending disclosure requirements for B and C lenders.

The legislation's approval in the fall of 1994 was a "reality check" for B and C lenders, said J. Terrell Brown, chairman and chief executive officer of United Companies, because of the lack of support these lenders received from either the Mortgage Bankers Association of America or the National Home Equity Mortgage Association.

The legislation, introduced by Rep. Joseph P. Kennedy 2d, D. Mass., defines certain loans as "high cost" depending on a ratio of fees and interest rates to total loan value.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Subprime Mortgage Lenders Form Their Own Trade Group


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?