Subprime mortgages became very one of the main reasons that America has experienced a real estate crisis. Subprime lending (near-prime, non-prime, or second-chance lending) in finance means making loans that are in the riskiest category of consumer loans. These loans can dramatically increase in how much a borrower has to pay monthly to a lender. These increases can easily become difficult for a borrower to handle and the borrower could place himself at risk of losing their home (if it is a subprime mortgage loan).

The Wall Street Journal reported in 2006 that 61% of all borrowers receiving subprime mortgages had credit scores high enough to qualify for prime conventional loans. During the current real estate crisis, too many people of color (African Americans and Latinos) received these very expensive subprime loans when they qualified for lower cost conventional mortgage and auto loans. This group of Americans also lead the rest of Americans in losing their home through foreclosure.

Subprime borrowers show data on their credit reports associated with higher default rates, including limited debt experience, excessive debt, a history of missed payments, failures to pay debts, and recorded bankruptcies. How does a person know when they qualify for a lower cost prime loan when the loan officer makes more money selling subprime loans to clients and the officer is all about the money. Too many of these loan officers were more concerned with the money they made and did not care about finding the best, lowest cost loan for their clients.

This is one of those areas where government regulation is needed. However, if the government in charge decides to look the other way or simply give the regulators limited authority and funding to regulate, many people can be bamboozled into accepting higher cost subprime loans. This is exactly what happened which helped create one of the greatest real estate and financial meltdowns in the history of America.

Prime loans go to borrowers with a credit score above 620 (credit scores are between 350 and 850 in the US). Since brothers typically do not own the banks and lending companies making loans, there should be a way for brothers connected to at a minimum share information about how the loan business works. This could assist many brothers and their families when receiving loans that are the best for them giving their credit history and financial situation.