Using information provided by subprime lenders, Lending Arsenal’s multi-lender loan pricing search engine for mortgage professionals effectively uses information from top wholesale lenders to help you compare sales quotes with rates and rebates, all tailored to your borrower's loan scenario.

Subprime lenders are organizations that finance subprime loans. Subprime loans, also known as non-conforming loans, are those loans that do not meet Fannie Mae and Freddie Mac’s minimal guidelines, ranging widely both in rates and in broker rebate points. The practical effect of this broad range of rates and broker rebate points is to render the choice of lender much more significant for the loan originator because the loan originator needs to offer each borrower a competitive rate and to make as much profit as possible on each and every deal.

Subprime loan scenarios offered by subprime lenders can differ greatly from one to the next in their parameters because of the very characteristics that make them non-conforming in the first place. Because they often carry very different risks, they are also likely to be very differently priced. Each subprime lender develops its own risk analysis based on the parameters of the loan scenario. Although the analyses applied by different subprime lenders may vary, most of the lenders use a similar set of input data, comprised of the particular relevant characteristics of a given borrower and his or her proposed loan parameters.

Each subprime lender usually has its own niche (or niches) in which it tends to be extremely competitive. Depending on the given loan scenario, the same subprime lender could be very competitive, or not at all competitive in a particular case. In other words, the same non-conforming loan, on the same day, could often “qualify” for a dramatically different price for both the borrower and the broker, depending on which subprime lender underwrites the loan.

Depending on how closely a particular loan scenario matches with a given subprime lender’s risk assessment model, the borrower may see a difference of several hundred dollars on a monthly mortgage payment, and the broker may see the difference of $3000 to $4000 on the broker rebate (based on a typical loan amount of about $200,000). The differences could be even more significant on larger loan amounts.

Due to high variability between deals offered by numerous subprime lenders, it becomes very tedious for mortgage brokers to price and originate best subprime loan scenarios that would bring in the clients and generate maximum revenue for the loan originators. Typically, brokers either guess what companies would have best deals, going with their instincts to originate loans, or they fill out and fax applications to multiple subprime lenders, hoping to receive competitive quotes. A third method would be to use subprime lenders’ online loan prequal services. In all of these cases, the procedure is either highly error-prone or takes a long time to complete, considering that information about a particular loan scenario has to be processed anew for each individual lender, often resulting in smaller profits or loss of customers altogether. Such outcome necessitates the use of multiple lender pricing engines, such as Lending Arsenal, in order to compare loan options from multiple lenders, while only having to enter loan scenario once.