subprimes
Junk home loans
Subprimes refers to subprime loans or mortgages—credit extended to borrowers with weak credit histories or limited ability to repay.
The term gained prominence during the 2008 financial crisis, when widespread defaults on subprime mortgages triggered a global economic collapse: The bank's exposure to subprimes wiped out its balance sheet.
Also used for the borrowers themselves or the securities backed by such loans.
Global economic meltdown
- Great RecessionMajor 2008 economic decline
- Lehman BrothersDefunct investment bank
- bailoutEmergency aid preventing bankruptcy
- TARP2008 bank rescue program
systemic risk · contagion · credit crunch · bank failure · market panic · AIG · Fannie Mae · Freddie Mac
Pooled debt investment vehicle
- tranchesPortions of a whole
- credit default swapsContracts insuring against debt failure
- derivativesThings derived from another
- junk bondsLow-rated corporate securities
asset-backed · credit ratings · S&P · yield · spreads · bundling · secondary market · hedge funds
Rate that changes periodically
- ARMReduced instruction processor standard
- defaultPreset standard option
- foreclosureLender seizes mortgaged property
- housing bubbleUnsustainable property price surge
credit score · teaser rates · refinancing · origination · securitization · liar loans · balloon payments · underwriting
2008 crash
Global economic meltdown
- Great RecessionMajor 2008 economic decline
- Lehman BrothersDefunct investment bank
- bailoutEmergency aid preventing bankruptcy
TARP · systemic risk · contagion · credit crunch · bank failure · market panic · AIG · Fannie Mae · Freddie Mac · write-downs
CDO
Pooled debt investment vehicle
- tranchesPortions of a whole
- credit default swapsContracts insuring against debt failure
- derivativesThings derived from another
junk bonds · asset-backed · credit ratings · S&P · yield · spreads · bundling · secondary market · hedge funds · toxic debt
adjustable-rate
Rate that changes periodically
- ARMReduced instruction processor standard
- defaultPreset standard option
- foreclosureLender seizes mortgaged property
housing bubble · credit score · teaser rates · refinancing · origination · securitization · liar loans · balloon payments · underwriting · delinquency
- 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