The Art Of Innovative Financing

If there is any artistry in the subprime lending industry, it is "out of nothing".

When RFC is engaged in loan business as a loan investor, our priority is to purchase closed loans that meet the lending criteria.

When the loan approver sees these loan documents, they have already gone through the process of kneading, pushing, pushing and pulling, and have been pruned into the existing ones.

It was not until I was in direct contact with brokers that I learned what innovation finance was like.

My sales manager, rob reg, called this process "chicken droppings for chicken salad".

Although it is not poetic, it summarizes the true meaning of this industry.

The subprime mortgage industry has been widely reported by the media.

From the broker who created the loan to the securitized investment institution, every link in the food chain was seen everywhere.

However, a key part has been largely ignored - how the borrowers who initially did not have enough loans became eligible.

Although there are sufficient detailed records and certificates for consumers who receive income declaration loans, the way to qualify borrowers actually is much more complicated.

This chapter examines these methods in detail, and we can see how difficult it is to loan to get them ready for sale in the two tier market.

By 2000, the subprime lending industry had already formed a matrix operation, which means that the loan companies should put the credit reports of the borrowers (credit score, bankruptcy records, redemption rights and so on) into the form to determine their credit rating.

The higher the credit rating, the lower the first payment and the lower the interest rate.

What does a borrower do when he has too low a credit rating and doesn't have enough money to pay the down payment?

Assuming that he does not have a rich uncle to lend a helping hand, the alternative is obvious: give up loans, fraud, and find another way.

If there is any artistry in the subprime loan industry, it is "out of nothing".

When RFC is engaged in loan business as a loan investor, our priority is to purchase those closed loans that meet the lending guidelines.

When the loan approver sees these loan documents, they have already gone through the process of kneading, pushing, pushing and pulling, and have been pruned into the existing ones.

It was not until I was in direct contact with brokers that I learned what innovation finance was like.

My sales manager, rob reg, called this process "chicken droppings for chicken salad".

Although it is not poetic, it summarizes the true meaning of this industry.

The first part of this chapter will explain the basic principles of risk management and how to use it in subprime lending.

The second part will review several cases to illustrate the various skills needed to make difficult loans (borrowers too poor).

The last part examines the housing assessment process to see what are the ways to control the value of real estate.

These are the strategies used by mortgage brokers, loan managers, loan approvals, loan managers and assessment agencies.

In the subprime lending industry, the process of changing loans to enable borrowers to obtain loan qualification has become standardized practice.

This is an indispensable link to enable difficult loans to pass.