Subprime lending taking off

National Mortgage News published results of the publication's exclusive survey showing that subprime lending — loans made to consumers who wouldn't normally qualify for a mortgage loan based on their credit history, employment history, debt-to-asset ratio or other economic factor — set a record for production in the second quarter. $157 billion in mortgages were originated on behalf of subprime borrowers, more than 19 percent of all loans funded. The figure was nearly double 2003's 9.9 percent.

In an effort to make up for declining refinancing volume, many lenders are creeping toward the "A-" market — sort of the limbo between conventional and subprime — or expanding subprime production, the report suggests.

NMN reported that the top subprime lender in the second quarter was Ameriquest Mortgage, with $12.5 billion in loans. New Century was right behind at $12.3 billion, followed by Countrywide, the nation's leading overall originator ($9.5 billion), First Franklin ($8.7 billion) and Washington Mutual ($7.1 billion).

Countrywide's subprime volume increased 124 percent from the second quarter of 2003. NMN reported that 19 of the top 20 subprime funders experienced a production increase in the quarter. Conversely, 17 of the top 20 conventional lenders saw a production decline, the publication said.