Blemished Borrower Law and Legal Definition

A blemished borrower is a borrower who takes a loan to raise cash or to purchase an investment property, facing certain risk factors. A blemished borrower has low credit scores and a lower income relative to the expected total obligations. Hence, such borrowers can only make a very small or no down payment and cannot fully document their income and assets. Their property is something other than a single-family home and their mortgage carries an adjustable rate that will result in substantially higher payments in a few years.