Subprime mortgage

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 ?
At the peak of the recent housing boom, subprime mortgage companies were loaning $600 billion per year to homebuyers with poor credit histories.
Two former Bear Stearns fund managers, Ralph Cioffi and Matthew Tannin, have been found not guilty of misleading investors about the subprime mortgage market at the height of the real estate boom.
The myth that subprime loans went only to those with bad credit arises from overlooking the complexity of the subprime mortgage market and the fact that subprime mortgages are defined in a number of ways--not just by the credit quality of borrowers.
The similarity of the loan termination rates for all vintages in the sample suggests that subprime mortgage loans were intended to be "bridge" (i.
In 2008, the subprime mortgage crisis led to the collapse and bankruptcy of a number of American companies, and the bailout or purchase of others.
Did they underestimate the likelihood of the impending fall in house prices, or did their models fail to uncover the true sensitivity of foreclosures to lower house prices, perhaps because there was no experience in the data that included falling house prices and widespread subprime mortgage originations?
Several new arrangements facilitated the development of the subprime mortgage market, the market for mortgages for households that do not qualify for traditional loans.
As the American subprime mortgage crisis progresses, a litigation aftershock moves through U.
subprime mortgage turmoil in the year ended March 31, sources familiar with the matter said Thursday.
The subprime mortgage problem and the recent failure of the Wall Street investment bank Bear Stearns has created some public confusion about the security of the financial services industry.
WASHINGTON -- The poorest counties in the United States are among the hardest hit by the subprime mortgage crisis, according to a study released Feb.
Ohio's attorney general announced in January he has filed a multimillion-dollar lawsuit against Freddie Mac, alleging the publicly traded GSE defrauded the state public employee pensioners by hiding billions in subprime mortgage lending losses.