Mortgage Lenders are Starting to Go Broke Amid Rate Spike and US Mortgage Lenders are Starting to Go Bankrupt — How This One Factor Could be Triggering the Worst Surge of Failures Since 2008
"Last year, two-thirds of the top 20 lenders were non-bank lenders." "Most housing market watchers believe today’s conditions — led by stricter lending rules — mean the U.S. is likely to avoid a 2008-style housing market meltdown."
Why this is important: The U.S. mortgage industry is seeing its first lenders go out of business after a sudden spike in lending rates, and the wave of failures that may be coming could be the worst since the housing bubble burst about 15 years ago. Sprout Mortgage and First Guaranty Mortgage Corp. specialized in riskier lending that is not eligible for government backing and are two non-qualified mortgage ("NQM") lenders that recently filed bankruptcy petitions. NQMs use non-traditional methods of income verification and are frequently used by those with unusual income scenarios, are self-employed or have credit issues that make it difficult to get a qualified mortgage loan.
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