Five to ten years ago, heck, even last year, it was relatively easy to get a home loan, even for someone with dubious credit. Subprime mortgages were all the rage. But, as Dan Green of The Mortgage Reports points out in its Sub-Prime Shakeout category, these loans are getting harder to come by. Not only are the interest rates for subprime mortgages going up, but the lending standards have tightened as well. Here’s how it happened, according to The Mortgage Reports:

When home values stopped rising, sub-prime lending reversed course
and began to default at a rapid clip.  Suddenly, the rates of return
were not high enough to compensate for the risk.

Rather than hold a worthless asset, some investors sold the loans
for less than "face value".  This is akin to selling a home for cheap
in a down market because you’d just "get it off the books" and move on
with your life.

This particular post goes on to make the point that some fund managers, notably Bear Stearns, went forward and bought these loans on the cheap. Unfortunately, that backfired and instead led to a rather messy collapse. So, that put subprime mortgages into even more of a tight spot.

Right now, it might be best to hold off on the homebuying if you think you will need a subprime loan. They are rather hard to come by.