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20091026

Sub-prime home mortgages are back

The market share of sub-prime US home mortgages, which caused the collapse of the housing market at the epicenter of the financial crisis, has returned to pre-crisis levels according to a central bank report released Monday. Fannie Mae, Freddie Mac, and Ginnie Mae now own or guarantee an overwhelming share of originations. The U.S. government seized control of Fannie Mae and Freddie Mac in September 2008, after a surge in mortgage defaults threatened to topple the companies. The subprime market had shrunk to virtually zero percent in the first quarter of 2008 after triggering the housing collapse following defaults by borrowers.Subprime borrowers, usually lacking good credit histories, find it nearly impossible to obtain mortgage loans from mainstream lenders.

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