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MORTECH 2000 provides technology prospectus and retrospective

Apr 12, 2005

What's in a name?Sandye Glazersub-prime loans, non-conforming loans, terminology If Webster's Dictionary defines "prime rate" as "designating the most favorable rate of interest available on loans from banks," then does "sub-prime rate" mean designating the most unfavorable rate of interest available on loans from banks?" Conventional wisdom, state legislatures and consumer advocates certainly seem to think so. In 2002, it has become politically correct to bash sub-prime mortgage lenders, likening them to used car salesmen and purveyors of snake oil. The term "non-conforming lender" has a nicer ring to it, doesn't it? If "conforming" means, "the same or similar," then "non-conforming" must mean, "standing on one's own and thinking outside the box." Dare I say it, but that nearly sounds commendable! So, I say, let us go back to making non-conforming mortgage loans available to those borrowers who do not run with the pack. Why not forget about sub-prime entirely? After all, a rose by any other name smells just as sweet, since, qualifying for a non-conforming mortgage loan means the exact same thing as qualifying for a sub-prime mortgage loan. "Sub-anything" just sounds worse. In articles on predatory lending, the villainous, mustached loan officers are never referred to as non-conforming mortgage lenders. They are sub-prime mortgage scalawags, prying on poor, lonely and weak borrowers. However, if they were written as non-conforming lenders instead, they would likely be seen as counselors, offering opportunity and advice for the innocent, young and needy. It all boils down to the old "I say, 'tom-ay-to,' and you say, 'tom-ah-to'" routine. I say, "non-conforming," and you say, "sub-prime." I say, "filling a need," and you say, "taking advantage of a group." I say, "opening up the housing market to credit-challenged consumers," and you say, "shamelessly exploiting unsuspecting borrowers." So, let's forget "sub-prime" all together and return to the "non-conforming" label. Or maybe "credit-challenged lending." How about "obstacle-heightened lending?" Or even "anti-traditional lending," or "can't-cut-the-mustard lending," or.... Sandye Glazer is an underwriter and administration vice president at Allison Mortgage Loan Servicing Corporation in Atlanta. She may be reached by phone at (404) 303-8777, ext. 104, fax (404) 303-0894 or e-mail [email protected].
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