With the so-called real estate bubble in gradual deflation, more and more subprime mortgage lenders are feeling the crunch.

Not just a few mortgage companies, banks and lenders have closed shop or laid their employees off with more and more debtors failing to meet their mortgage payments.

Since subprime mortgages primarily target those who do not have good credit ratings as clients, the risk being posed against subprime mortgage lenders are greater.

Most lenders may require applicants who would like to purchase a new home or refinance their current residences, a FICO score of at least 700 before granting them a good financing deal

Those whose credit ratings fall way below the requirements may opt to apply for subprime mortgages, which finance at higher interest rates and run at adjustable rates.

Chances of delinquency in subprime mortgages are way greater than that of regular mortgages. At the onset of the year 2000, the real estate industry was at its peak.

Easy credit and appreciating home values encouraged more and more people to avail of subprime mortgages and purchase their homes.

However, as the real estate bubble deflated, the value of residences began to depreciate and more and more borrowers failed to meet their payments. Still a greater number who were on adjustable rate mortgages failed to refinance and were forced to default.

Unfortunately for lenders, the financial crisis and the real estate crunch has raised delinquency rates among borrowers even higher.

What is even hurting the industry more is that as the housing and real estate industry remains in a slump.

The value of residences has failed to go up and lenders are now least likely to regain the full value of the mortgages.