What is their plan?

Implications: What a strange marriage, with Lone Star refusing to come to the wedding ceremony, Accredited sueing them, and the two eventually tieing the knot.  Lone Star must have some vision for what to do with Accredited, but at the moment, there is almost no market for sub-prime loans. The only logical plan is that Accredited will be the Last Man Standing when the sub-prime sector comes back to life.  It's actually a valid business, but one that was trashed with lax credit standards and financial engineering that allowed sub-prime loans to end up in securities, some of which now had triple-a ratings. Sub-prime works when you limit the loan-to-value ratios.  It worked just fine when the max LTV was 70%.  It didn't workwhen these moved up to 95% or even 100%. At some point, new, tighter standards will emerge, and investors will tip-toe back in.  The yield requirements will be higher and the loan-to-value ratios will be lower, and 3-5 years from now, people will have forgotten 2007.

Analysis: See above