Boosting credit score requirements
In many cases, lenders raise the minimum credit score by 20 points or even 40 points to qualify for a type of loan. An example: In late February, Merrill Lynch-owned subprime lender First Franklin sent an e-mail to mortgage brokers, telling them that the minimum score for loans for 100 percent of the home's value had been raised from 580 to 620 for customers who would document their income and assets.

For borrowers who didn't want to provide proof of income, the minimum credit score went up from 640 to 660 -- and first-time home buyers who were wage earners would have to make down payments of at least 5 percent.

Effectively, this meant that First Franklin withdrew from the subprime market for two types of customers: Buyers who don't have down payments and homeowners who want to refinance but have no equity. Loans are still available for subprime borrowers with substantial down payments or accumulated equity.

Other lenders are tightening in similar ways. But that's not much of a deterrent to mortgage brokers, who originate most subprime loans, says Christopher Cruise, who trains mortgage brokers and loan officers. Brokers have multiple lenders to choose from, and if one lender makes a certain loan program unavailable, a broker probably can find another lender that still offers it.

"It's not like, 'Oh, my goodness, we don't have this product anymore,'" Cruise says. "We just have to find another place to place the product."

Subprime mortgage rates up, too
Lenders haven't only tightened standards. They have boosted rates. Rates on the most popular type of subprime loan, called a 2/28 mortgage, have gone up about 1.5 percentage points to 2 percentage points since mid-January, says Jim Svinth, chief economist for LendingTree.com. That rise is purely a reflection of credit risk.

A 2/28 mortgage has an initial interest rate that remains fixed for the first two years. Then the rate adjusts annually after that. The fully indexed rate -- the rate after two years -- is high on this type of loan, often above 10 percent. These loans are intended to be temporary -- the borrower is supposed to make on-time payments for two or three years and then refinance to a lower-rate prime mortgage. There's often a prepayment penalty (euphemistically called a "commitment period" by some lenders) that shackles the borrower to the loan for the two years.

Svinth says one type of subprime customer could end up in big trouble: "If you were a 2/28 borrower a couple of years ago, and you can't document your income and don't have enough equity to put 10 percent down, and your credit hasn't got any better, you're in a bad spot," he says.

The equity problem is particularly knotty. A lot of borrowers bought houses with no money down and made interest-only payments, counting on home values to rise so they would have equity when it came time to refinance. With house values dropping in many markets, some homeowners have no equity, and some even owe more than the house is worth. They may find it impossible to refinance.