Subprime lending, the practice of extending credit to borrowers with low incomes or poor, incomplete, or nonexistent credit histories. Subprime mortgage loans, the most common form of subprime lending, are characterized by higher interest rates and more-stringent requirements to compensate lenders for the higher credit risk involved.
Write-downs on the value of loans, MBS and CDOs due to the subprime mortgage crisis.
Subprime loans are perfect for people who need to pay off other debts. Outstanding debts harm a borrower's credit score. With a low credit score, a borrower can receive a subprime loan, pay off his or her existing debt, and then work to make payments on the subprime loan on time.The Evolution of the Subprime Mortgage Market Souphala Chomsisengphet and Anthony Pennington-Cross Of course, this expanded access comes with a price: At its simplest, subprime lending can be described as high-cost lending. Borrower cost associated with subprime lending is driven primarily by two factors: credit history and down payment.Summary On June 29, 2007, the Federal Reserve and the other federal financial institutions regulatory agencies (the agencies) issued the attached final Statement on Subprime Mortgage Lending (Subprime Statement) to address issues and questions related to certain adjustable-rate mortgage (ARM) products marketed to subprime borrowers.
Award Emblem: Top 5 Subprime Mortgage Lenders. There are options to obtain mortgages for bad credit from bad credit mortgage lenders. Called subprime mortgages, these poor credit home loans are designed to offer homeownership opportunities to consumers whose credit score may not meet the minimum standard of a traditional lender or who might have a higher debt-to-income ratio.Read More
Causes: Subprime Lending. Other posts in this occasional series. Six months ago, this post would have been unnecessary. Back then, for most people, the crisis was the “subprime crisis:” subprime lending had become too aggressive, many subprime mortgages were going to go into default, and as a result securities backed by subprime mortgages.Read More
Notes: As discussed in the 2001 interagency Expanded Guidance for Subprime Lending Programs, the term “subprime” refers to the characteristics of individual borrowers. Subprime borrowers typically have weakened credit histories that include payment delinquencies and possibly more severe problems such as charge-offs, judgments, and bankruptcies.Read More
Subprime mortgage, a type of home loan extended to individuals with poor, incomplete, or nonexistent credit histories. Because the borrowers in that case present a higher risk for lenders, subprime mortgages typically charge higher interest rates than standard (prime) mortgages. The most common type of subprime mortgage contract offered in the United States is the adjustable rate mortgage.Read More
A subprime mortgage generally refers to loans made to borrowers with low credit scores, and while they're not as common in the current loan-making landscape, they are slowly making a comeback.Read More
The sharp rise in subprime mortgage lending began in the mid-1990s and accounted for roughly 20 percent of home loans in 2006 (source: Federal Reserve).On the plus side, subprime mortgages allow people with poor credit a chance to get into a market previously unavailable to them with standard home loans.The downside of this scenario is that these loans are more likely to go into default.Read More
Troubles in the subprime mortgage industry seem to be spreading. The stock market is in turmoil. Alan Greenspan and other economists say the economy is being hurt. Consumer groups predict that up.Read More
Lending to individuals who have a bad credit history or relatively low income. A higher interest rate is charged for such loans because risk to the lender is higher. Excessive subprime lending is often pointed to as one of the major causes of the financial crisis of 2008-2009.Read More
The causes of the crisis in subprime mortgages have become clear. They started with poor underwriting practices, which became legion. But damage was propagated at each stage of the complicated process in which a risky home loan was originated, then became an asset-backed security that then formed part of a collateralized debt obligation (CDO) that was rated and sold to investors.Read More
Subprime mortgage lending earned a bad reputation in the years leading up to the financial crisis of 2007-2008, and rightfully so. In the midst of a freewheeling lending environment that ignored.Read More