'Blue Skies Ahead' for Subprime?

While the prime side of the mortgage business is expected to slow somewhat this year in the absence of a strong refinancing market, the subprime sector could actually post some gains, says the chief economist of the Mortgage Bankers Association.Noting that nonprime, or alternative, lending is "much less interest rate sensitive" than the prime market (and will be the least affected by an improving economy), Doug Duncan told the MBA's Subprime Lending Conference in Washington that the sector might even see some growth in 2004, even as the rest of the mortgage market falters. "The times have never been better for subprime," agreed David Farrell, a senior vice president at Countrywide Financial Corp., West Hills, Calif., and chairman of the MBA's Nonconforming Credit Lending Committee. "I don't see much beyond blue skies ahead," he said, noting that Countrywide alone did $3 billion in alternative loans in April. Subprime represents "our growth potential for the next few years," he said. WMC Mortgage, Woodland Hills, Calif., is also going great guns, according to Simon Cobbin, WMC's director of national accounts. WMC's volume, which reached $8 billion last year, is running at over $1 billion a month so far this year, Mr. Cobbin reported.