Subprime mortgages are coming back!

They're now called "nonprime mortgages," and they're bringing in $10 billion each year to banks

By Matthew Rozsa

Staff Writer

Published August 31, 2017 2:18PM (EDT)

 (AP/David J. Phillip)
(AP/David J. Phillip)

Subprime mortgages may have played a major role in causing the Great Recession, but that isn't stopping people in the financial industry from trying to bring them back.

Subprime mortgages, which are now being referred to by many as "nonprime" mortgages, are expected to generate roughly $10 billion in 2017, according to CNBC. The industry's growth is being helped by President Donald Trump's administration, which has ordered federal agencies to review almost all of the financial rules passed by his predecessor, President Barack Obama.

According to former Citigroup chief underwriter Richard Bowen, these nonprime mortgages are coming back because banks can get away with it.

"No one has been held accountable," Bowen told CNBC. "And I can assure you it's not because of a lack of evidence."

Mike Fierman, the managing partner and co-CEO of Angel Oak in Atlanta, echoed these thoughts.

"Everyone was complicit," Fierman told CNBC. "You felt trapped; investors were demanding more loans than could be produced in a responsible way. The only way to produce that kind of volume was to be irresponsible."

One of the main triggers of the Great Recession was the economic crisis that occurred when banks and hedge funds that invested in subprime mortgages saw their assets become worthless due to a spike in foreclosures, according to USA Today. By 2008, the subprime mortgage crisis had managed to affect credit markets and the economy entered a recession. Soon the government needed to issue large and controversial bailout packages to protect financial industry giants deemed "too big to fail" from collapsing and leaving a trail of economic devastation in their wake.

By Matthew Rozsa

Matthew Rozsa is a professional writer whose work has appeared in multiple national media outlets since 2012 and exclusively at Salon since 2016. His diverse interests are reflected in his interview, including: President Jimmy Carter (1977-1981), Israeli Prime Minister Ehud Barak (1999-2001), animal scientist and autism activist Temple Grandin, inventor Ernő Rubik, comedian Bill Burr ("F Is for Family"), novelist James Patterson ("The President's Daughter"), epidemiologist Monica Gandhi, theoretical cosmologist Janna Levin, voice actor Rob Paulsen ("Animaniacs"), mRNA vaccine pioneer Katalin Karikó, philosopher of science Vinciane Despret, actor George Takei ("Star Trek"), climatologist Michael E. Mann, Washington Gov. Jay Inslee (2013-present), dog cognition researcher Alexandra Horowitz, Libertarian presidential candidate Gary Johnson (2012, 2016), comedian and writer Larry Charles ("Seinfeld"), Democratic vice presidential nominee Joe Lieberman (2000), Ambassador Michael McFaul (2012-2014), economist Richard Wolff, director Kevin Greutert ("Saw VI"), model Liskula Cohen, actor Rodger Bumpass ("SpongeBob Squarepants"), Senator John Hickenlooper (2021-present), Senator Martin Heinrich (2013-present), Egyptologist Richard Parkinson, Rep. Eric Swalwell (2013-present), media entrepreneur Dan Abrams, actor R. J. Mitte ("Breaking Bad"), theoretical physicist Avi Loeb, biologist and genomics entrepreneur William Haseltine, comedian David Cross ("Scary Movie 2"), linguistics consultant Paul Frommer ("Avatar"), Maryland Gov. Martin O'Malley (2007-2015), computer engineer and Internet co-inventor Leonard Kleinrock and right-wing insurrectionist Roger Stone.

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Related Topics ------------------------------------------

Business Donald Trump Economy Great Recession Subprime Mortgages