Mortgages to borrowers with spotty credit histories have yet to come roaring back from the financial crisis, but they are on the rise at the private equity giant Lone Star Funds, the New York Times reported today. Its wholly owned mortgage business, Caliber Home Loans, is one of the few financial firms to report a significant percentage increase this year in the dollar value of subprime mortgages it is managing and servicing for homeowners. Most of the subprime mortgages at Caliber are “legacy” loans, those issued before the housing bust, which Lone Star acquired from banks and federal agencies. For the second time in three months, Lone Star, which was founded by the billionaire investor John Grayken in 1995, has indicated that it is on the verge of bringing to market a mortgage securitization backed mainly by newly issued mortgages to borrowers with troubled credit histories. Many of the nonprime mortgages bundled into the bond offerings were written by Caliber in the last two years. Lone Star and Caliber sold a similar but smaller bond offering last year.
