Non-conforming loans, are mortgages that do not conform to a lender’s typical loan underwriting criteria. This may include situations where the applicant has a poor credit history, or who may not have been employed long enough to show a history of earning an income. Nonconforming loans may exceed 80% of the security’s value and the interest rate is based on the severity of the credit history.
Because the asset is vital to these loans, the location of the security is also imperative. Hence insurers and lenders alike may not lend in high-risk areas such as inner-city high-rises or large rural allotments.
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