The secret sauce for sub-prime lending success at your credit union

first_imgHaving been in the lending business for 33 years and seeing many companies come and go in the sub-prime market space, I have a feel for what it takes to be successful in the long term. I stress ‘long term’ because literally hundreds of companies have succeeded for a couple of years only to suffer from a variety of ailments.So, what’s the secret sauce for a successful sub-prime lending program at your credit union?  As the saying goes, “results may vary,” but here are some of the ingredients you need to have in your pantry.1 cup underwritingIt all starts with sound underwriting. Since credit histories will be inherently be checkered, sound underwriting means your credit union has to avoid risk layering, or the practice of underwriting multiple layers of risk. An example of risk layering is a borrower with a FICO score in the 500’s, who has marginal ability to repay, and is seeking more than book value on an older car with extended terms. For those of you keeping score in the office, that’s five layers of risk. continue reading » 8SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblrlast_img read more

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