Subprime Mortgage Lending - Expanded Guidance

Even in the late 1990s, subprime lending was becoming more and more of a problem. The 2001 Expanded Guidance was an expansion of earlier statements about this issue. The agencies' focus was the responsible use of subprime lending to assist subprime consumers to win back their credit ratings. Regaining lost credit would enable these people to enhance their financial situations. At the same time, the agencies stressed that lenders who assume a greater risk by lending to subprime individuals must also show evidence of ability to maintain their duty of upholding the public's trust in financial matters. It is the lender's responsibility to assess most carefully whether or not the borrower is likely to be able to repay the debt incurred. Painstaking effort is required to create strict rules of underwriting to assist in such... [read full story]