subprime
Financially precarious lending
Subprime describes loans or borrowers that don't meet prime lending standards—typically those with lower credit scores, higher default risk, or less favorable terms.
Subprime mortgages carry higher interest rates to offset the lender's risk.
The term became widely known after the 2008 financial crisis, when mass defaults on subprime mortgages triggered a global economic collapse: The subprime meltdown destroyed billions in wealth.
Criminal or neglectful behavior
- foreclosureLender seizes mortgaged property
- repossessionCreditor seizing collateral
- bankruptcyLegal status when insolvent
- nonpaymentFailure to settle debts
arrears · missed payments · underwater · negative equity · eviction · collection · credit damage · loan modification
Numerical measure of borrower reliability
- high-riskInvolving significant danger
- low incomeEarnings below average
- credit historyRecord of past borrowing
- debt-to-incomeObligations relative to earnings
marginal · unqualified · credit rating · affordability · overextended · first-time buyer · creditworthy · risk profile
Secured home loan
- borrowerOne who takes temporarily
- predatoryExploiting the vulnerable
- adjustable-rateRate that changes periodically
- ARMReduced instruction processor standard
no-doc · interest-only · teaser rate · reset · balloon payment · originator · broker · qualification
Catastrophic loss of control
- housing bubbleUnsustainable property price surge
- bailoutEmergency aid preventing bankruptcy
- collapseSudden structural failure
- credit crunchSevere reduction in lending
predatory lending · financial crisis · Wall Street · 2008 · Great Recession · Lehman Brothers · contagion · systemic risk
Backed by home loans
- CDOPooled debt investment vehicle
- tranchePortion of grouped securities
- derivativeFunction's rate of change
- ABSAnti-lock braking system
collateralized · securitization · bond · rating agency · junk · toxic · credit default swap · pooling
delinquency
Criminal or neglectful behavior
- foreclosureLender seizes mortgaged property
- repossessionCreditor seizing collateral
- bankruptcyLegal status when insolvent
nonpayment · arrears · missed payments · underwater · negative equity · eviction · collection · credit damage · loan modification · short sale
credit score
Numerical measure of borrower reliability
- high-riskInvolving significant danger
- low incomeEarnings below average
- credit historyRecord of past borrowing
debt-to-income · marginal · unqualified · credit rating · affordability · overextended · first-time buyer · creditworthy · risk profile · financial distress
mortgage
Secured home loan
- borrowerOne who takes temporarily
- predatoryExploiting the vulnerable
- adjustable-rateRate that changes periodically
ARM · no-doc · interest-only · teaser rate · reset · balloon payment · originator · broker · qualification · income verification
meltdown
Catastrophic loss of control
- housing bubbleUnsustainable property price surge
- bailoutEmergency aid preventing bankruptcy
- collapseSudden structural failure
credit crunch · predatory lending · financial crisis · Wall Street · 2008 · Great Recession · Lehman Brothers · contagion · systemic risk · TARP
mortgage-backed
Backed by home loans
- CDOPooled debt investment vehicle
- tranchePortion of grouped securities
- derivativeFunction's rate of change
ABS · collateralized · securitization · bond · rating agency · junk · toxic · credit default swap · pooling · investor
- "Sub-" wordssubway, submarine, subtract, subject, suburb
- creditcredit card, credit score, credit limit, credit cards, credit scores
- mortgagesfixed-rate mortgage, mortgage broker, adjustable-rate mortgage, mortgage payment, mortgage insurance
- credit scorescredit score, credit report, credit history, credit bureau, FICO score
- credit termsloans, installment loan, credit limits, monthly payment, credit cards
- Financial Crisisfinancial crisis, Great Recession, recession, credit crisis, bank failures
subprimeprime
Readying for action
investment-grade · excellent credit · good credit · creditworthy · low-risk
- subprime mortgageHousing loan for unqualified borrowers
- subprime loansHigh-risk borrower financing
- subprime lendingLoans to high-risk borrowers
- subprime lenderLoans to risky borrowers
- subprime mortgage crisisRisky loan defaults cascade