Subprime mortgage

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Subprime mortgage

Subprime refers to higher the risk. These are mortgages that are issued to individuals who are often not qualified. That is, the long term monthly mortgage payment is more than their income. Often, these mortgages are issued on the expectation that the homeowners income will rise in the future. These mortgages are often made feasible by teaser rates. This means that the rate might be very low for the first few years but then rise steeply. In periods of weakness in the housing market or the economy in general, these mortgages are the first to run into trouble.

Subprime Mortgage

A mortgage with an interest rate higher than most other mortgages. Subprime mortgages are provided to borrowers who do not qualify for ordinary loans because of bad credit history or some other reason. There is a higher risk of default on subprime loans. Their prevalence was a significant factor in the 2008 credit crunch.
References in periodicals archive ?
MORE than half of subprime mortgages in Ireland are in arrears by more than 90 days, official figures have revealed.
The problems with subprime mortgages are well-known, with many defaults and repercussions for businesses and investors alike.
Subprime mortgages have been getting a lot of attention in the United States since 2000, when the number of subprime loans being originated and refinanced shot up rapidly.
LOUIS, March 5 /PRNewswire/ -- Proponents of subprime mortgages argued that this type of financing could encourage homeownership for people who otherwise couldn't afford to buy a house, but a recent analysis from the Federal Reserve Bank of St.
The termination rates of subprime mortgages that originated each year from 2001 through 2006 are surprisingly similar: about 20, 50, and 80 percent, respectively, at one, two, and three years after origination.
In hindsight, the risks of subprime mortgages are obvious.
As Gramlich explained in his fourth chapter, the social benefits of home ownership are significant; and the evolution of subprime mortgages received broad support in Congress and was generally well received in policy circles.
Surveys of in-house counsel published by the American Bar Association predict large increases in litigation involving subprime mortgages and investments.
The report, titled "Home Ownership, Subprime Loans and Poverty," found that in eight of the country's 15 poorest counties, which have poverty rates exceeding 40 percent, the percentage of homeowners holding subprime mortgages is even higher--up to 60 percent.
That's what happened on one important issue in this year's experimental annual session: Legislators adjourned Friday without giving stronger protection to people who finance their homes with subprime mortgages.
The expanding subprime-linked losses stem from the slumping housing market, which in turn boosted delayed repayments of subprime mortgages, thereby a steep fall in value of financial products that have incorporated subprime mortgages.
Subprime mortgages are loans given to customers with poor credit.