Education and the Subprime Lending Market: The Case of the Memphis Metropolitan Statistical Area (MSA)

Abstract

The subprime financial market is usually differentiated from the primary market by characteristics such as high interest rates, high points and fees, prepayment penalties, and high rejection rates (Cutts 3). Despite these generally negative attributes, the subprime market has served a key role in equity liquidity, providing many with much needed access to personal equity. This market provides a source of funds to credit impaired borrowers who are unable to obtain credit in the primary market, thereby expanding the quantity of lendable funds previously truncated by credit rationing.