Yet, at one time Union Acceptance orig-inated subprime loans, products they referred to as Tier 2. The company exited that line of business last year. 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.