Subprime lending

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Subprime lending

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.
References in periodicals archive ?
Each category -- first mortgages, home equity installment (HE) loans and home equity lines of credit (HELOC) -- showed significant increases in subprime originations over the same period a year ago.
While the FHA was still offering favorable mortgage terms for qualified borrowers, subprime lenders were offering a much easier and faster application process, at times with no down payment requirement.
Following Morgan Stanley s disclosure in November 2007 of several billion dollars in write-downs relating to a trading position in subprime securities, plaintiffs filed a class action alleging that Morgan Stanley and the individual defendants violated Section 10(b) of the Securities Exchange Act of 1934 by (1) misrepresenting Morgan Stanley s risk controls relating to monitoring its subprime trading positions, (2) misstating and omitting information regarding the extent of Morgan Stanley s exposure to subprime-related assets, including one of Morgan Stanley s subprime trading positions, and (3) overvaluing that subprime trading position in Morgan Stanley s third-quarter 2007 financial results.
Unfortunately, many of the most popular explanations that have emerged for the subprime crisis are, to a large extent, myths.
While they may have skirted the worst of the subprime crisis so far, Japanese financials still have a hefty exposure to securitised products overall, the data showed.
As a result, Mitsui Life will report a net loss of several billion yen for the 2007 business year, becoming the first major Japanese life insurer to see its net balance sink into the red due to subprime mortgage-related woes, the sources said.
For subprime ARM loans, there were approximately 13,000 loan modifications and 90,000 repayment plans established in the third quarter.
One of the main questions that the agencies ask is whether subprime mortgages are "inappropriately risky.
PRINCETON, NJ -- In a speech last week before the Federal Reserve Bank of Chicago's 43rd Annual Conference on Bank Structure and Competition, Fed Chairman Ben Bernanke addressed the topic of the subprime mortgage market and its potential impact on the residential real estate market.
Titled, "Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners," the CRL study is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006.
A critical report released last year by the National Consumer Law Center asserted that subprime loans have been a primary contributing factor in the increase in foreclosures and "rescue" scams across the country.
But the surge in subprime mortgages is also creating new forms of risk to subprime borrowers, holders of securities backed by subprime mortgages, and potentially the wider marketplace of housing finance.