But its consumers high debt to income ratio along with past payment problems, that have more of America's home buyers squeezing into sub-prime loans.  Loans that allow lenders to charge high percentage points to high risk consumers, which makes the subprime mortgage industry one of the most profitable.  

Over the past few years the subprime lending market has been one of the fastest growing markets eclipsing $625 billion up from $120 billion in 2001, according to John Bancroft of Inside Mortgage Finance. 

As the saying goes with risky borrowers comes risky loans and in the past such profit meant healthy profits, but not anymore.  "Fraud for housing and for profit schemes are causing consumers and 'real estate investors' to default within the first 30 - 90 days of the loan," says Sheri Fitzpatrick, Utah Real Estate Broker and CEO of the non-profit Perfect Home Living INC.  What hasn't been taken into account is the long term affect this type of crime has on every day Americans," Fitzpatrick added.     

As Perfect Home Living previously reported the subprime market is rethinking its strategy and for some that means exiting the business entirely.

Based on current performance 2006 is already on track to be one of the worst years ever for subprime loans according to UBS AG.  In the article "More Borrowers With Risky Loans Are Falling Behind" written by by Ruth Simon and James R. Hagerty of the Wall Street Journal, Thomas Zimmerman the head of asset backed securities research for UBS AG states there have been roughly 80,000 subprime borrowers who took out mortgages packaged into securities this year that are behind on their mortgage payments.   

Feeling the pressure of bad loans, Ownit Mortgage Solutions of Agoura Hills, California, which Merrill Lynch owned a 20% stake in without notice on December 6th closed its doors forever.  According to sources within the company, Ownit Mortgage made $5.5 billion in loans during the first half of 2006 and according to speculation was cut off from funding by JP Morgan Chase and Company as well as Merrill Lynch. 

H&R Block INC which owns Option One says its subprime unit posted a pretax loss of $39 million in the fiscal second quarter ending October 31, of this year and will be closing 12 of its branch locations.  H&R Block previously suggested that it may be willing to sale off Option One via the CDO market.

Staggered by the possibility of having to repurchase its loans Sebring Capital, a Texas based subprime lender that used warehouse lines of credit has closed its doors last week.

KeyCorp last week sold off its subprime lending unit for approximately $130 million far short of the $250 million expected from the sale.  KeyCorp stated it was leaving the subprime market entirely because it no longer fit the company's long-term strategic priorities.     

"As more of the housing markets become saturated housing prices will drop and consumers facing financial difficulty as the result of a subprime loan will find it increasingly difficult to sell their home.  And for those investing in the markets that believe this doesn't affect them, well your wrong.  Subprime mortgage-backed securities can be found in hot ticket items like hedge funds and the CDO markets where so much of today's investor dollars are spent," Fitzpatrick added.  

About Perfect Home Living 

Perfect Home Living assists in implementing programs and providing training to financial lenders as well as educating Utah's consumers and licensed professionals to red flags within Utah's real estate market.   For more information or to request assistance please visit us online at:  http://www.PerfectHomeLiving.com