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
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]