Credit card companies pursue subprime borrowers

[TexasLawyer]

Source: The Boston Globe

Credit card companies pursue subprime borrowers
By Robert Gavin The Boston Globe
Published: September 5, 2007

BOSTON: As subprime borrowers began to default on their mortgages in rapidly growing numbers this year, credit card issuers increased their efforts to sign up such customers with tarnished financial histories, according to a market research firm.

Direct mail credit card offers to subprime customers in the United States jumped 41 percent in the first half of this year, compared with the first half of 2006, according to Mintel International Group. Direct mail offers intended for customers with the best credit fell more than 13 percent.

Yet, during this same period, defaults on subprime mortgages rose significantly. In June, nearly one in five subprime mortgages was at least 60 days past due, and more than one in 20 were in foreclosure, according to First American LoanPerformance, a firm in San Francisco that collects and analyzes mortgage data.

Though it seems counterintuitive to extend credit to households already struggling with debt, the meltdown in the housing and the mortgage markets probably led credit card issuers to increase their marketing to subprime customers, said Julie Lizer, the manager of custom research at Mintel. As home values decline and lenders balk at writing subprime mortgages, these customers can no longer refinance and tap into home equity for cash. That leaves credit cards as their only option, Lizer said.



Read more: http://www.iht.com/articles/2007/09/05/business/card.php

[redqueen]

1. *sigh*

Who will reign in the banking industry racket?

[flamingyouth]

6. Not this administration, that's for sure.

Maybe it will be reined it after it collapses.

[Penance]

8. No, government won't reign it in

It will bail it out. After all, that's what government is for: insurance for the rich, politically connected investor.

[truthisfreedom]

2. Perfect. And with the new bankruptcy laws, they're legally creating indentured servitude.

This is utter madness. Will bushco step in? Never. They delight in it.

[depakid]

3. Don't expect the so called "moderate" Democrats to do anything about it either

They've been just as complicit in credit card and banking abuses as the Republicans have.

And they're not about to change their stripes.

[backscatter712]

4. Don't forget, after a bankruptcy, you can't declare bankruptcy again for seven years.

That's another reason why you're seeing this - if a borrower is defaulting on their mortgage or being foreclosed upon, they're more likely to declare bankruptcy soon. And if they get a credit card right after bankruptcy, or keep up with the payments during the bankruptcy so the debt's still valid, then the credit card company has them by the balls. They can't declare bankruptcy again for seven years, so if the borrower defaults on the credit card, then they can be sued, garnished, have bank accounts seized, liens placed on their cars and homes, etc. And there's no escape.

[Donnachaidh]

5. will Halliburton get the contracts to build debtor's prisons?

I'm only half-joking with this snark.

[sarcasmo]

7. Sharks feeding on their prey.