[js2]

I don't understand this criticism of the article. The point of the article is that lending standards are starting to loosen. The article provided a handful of numbers and one anecdote.

The article title and first sentence are: Mortgage Market Reopens to Risky Borrowers. Strict lending requirements that were put in place after financial crisis are starting to erode. The risky mortgage is making a comeback.

Supporting facts are:

- "Borrowers took out $45 billion of these unconventional loans in 2018, the most in a decade, and origination is on track to rise again in 2019."

- "Unconventional loans are largely being extended by nonbank mortgage lenders. But big banks have found another way in ... Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007."

Then there's the single anecdote about a borrower with a sub-690 FICO. Is sub-690 arbitrary? Yes. Is this borrower an example of an egregious loan? No. But is this someone who could not have gotten a loan previously? Yes. It supports the article.

The article is fair in its assessment:

- "Big banks’ mortgage arms are still avoiding riskier borrowers, leaving them to nonbank lenders. Still, the increase in unconventional loans shows that lenders are looking farther afield for customers."

Let me put it another way: at what point should the WSJ write an article like this? The 2008 financial crises cratered the economy after previous lending standards became lax. We put regulations in place to prevent that from happening again. Those regulations are starting to be weakened again. I want to know that.

[qroshan]

"The most in a decade" is where all the shenanigans of the article lie.

Let's say Peak 2006, Sub-Prime Loan was $600B

Let's say the average, natural Sub-Prime Loan is $100B

After the crash, may be the market over-corrected way to much and slowly crawling back to it's natural $100B.

With this perspective, the narrative becomes totally different. The lending standard is still too tight and still way below what the natural / average economy support. Remember there has to be a balance between exuberance and over-cautious. A journalist should find out, what the happy medium is

That's why numerical literacy is important

[darawk]

I'll also throw in there that it could be simply that mortgages are increasing overall, and that the sub-prime share of the mortgage pie isn't increasing at all.

[mactrey]

This line implies otherwise, since we can safely assume mortgage originations overall didn't double YoY:

> Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007.

Although the phrasing makes me wonder if more subprime loans are being originated or if more are just being securitized as opposed to being held on balance sheet.