That means rates charged to consumers vary little from one lender to the next. Fannie Mae and Freddie Mac set underwriting standards that loans have to meet before they'll buy them, too. So, lenders follow pretty much the same guidelines when deciding whether to make a loan. On the subprime side, mortgages and home equity loans can end up in any number of places. Large finance companies buy some of them.
Investment firms buy others for packaging into a different variety of mortgage-backed securities.
Some are even held in portfolio and serviced by the lenders making them. That means subprime originators have much more leeway when it comes to setting rates and underwriting standards. As a result, rates, fees and program guidelines vary drastically depending on which broker or lender a consumer visits. The Atlanta, Ga.-based company is a wholesale subprime lender, or one that makes loans through brokers. You don't have the same consistency from lender to lender because everyone's operating under different underwriting guidelines.