Subprime lenders are those who lend money to those who do not meet the creditworthiness standards of the strictest lenders.  This business has exploded in recent years as the mortgage lending industry loosened its credit standards.

Those of us who originate more traditional mortgages and are used to making sure that our clients were creditworthy shuddered as the subprime guys would seemingly lend to anyone. Some of that profligacy is now coming home to roost.

Subprime lending giant Ameriquest settled allegations of unethical and illegal conduct earlier this year by paying $325 million in fines and funding rebates for customers who were abused by their lending practices.

More recently, H&R Block, which originates subprime mortgages through it subsidiary Option One, announced a write-down of over $100 million due to the necessity of re-purchasing some loans that went into default shortly after they were originated.

In the latest chapter, ECC Capital, another Orange County, CA based subprime lender announced that it is selling its sub-prime origination business and getting out f that business. The buyer is Wall Street giant Bear Stearns which buys such loans and re-packages and sells mortgage backed securities. ECC stated that its shareholders are likely to get about $.80 per share from the transaction, a loss of almost 90% of its value when it went public at $6.75 per share.

Bottom line, there is a lot of blood in the streets in "Subprimeville" and there is more likely to be a lot more, and it&39;s going to have repercussions in the housing market.