A complete edited transcript of that con-versation will appear in a special subprime issue of Specialty Lender in October. Excerpts from the transcript follow. Union Acceptance limits its lending to the prime category. Prime lending requires excellent underwriting criteria. The problem is there really has never been a good database that has any predicting power of what makes the subprime customer pay.
Prime lending is predicated on a person s propensity and capacity to pay.
It s much easier to determine that on the prime side than on the subprime side. That s why we feel it s not natural to do subprime and prime together. They re totally different. The period when you began originating Tier 2, or nonprime, loans was about the time Union Acceptance was spun off from Union Federal Savings in 1995. In that period of time when we spun off there were so many nonprime and sub-prime companies coming to the market that we had requests from a lot of our dealers.