New Look, Same Lenders

Thousands of subprime mortgage firms are rebranding themselves as safe, government-backed financiers

1. THE SHIFT

When the subprime market began to collapse in 2006, many lenders and brokers shifted their business to loans guaranteed by the Federal Housing Administration

2. THE FACADE

The FHA has granted licenses to some firms with questionable histories; lenders in some instances have adopted new company names

3. THE TACTICS

Once approved, some former subprime lenders employ their old tactics, issuing loans to unqualified borrowers and running up high default rates

4. THE BOOM

Home loans insured by the FHA—meaning loans that are ultimately backed by taxpayers—account for 26% of all new mortgages, up from 4% in 2007