Do You Know Subprime

[ghaze]

"Subprime" refers to less than ideal loans. The interest rate is higher than normal and the loan may be risky for a number of reasons. A few examples are:
1.) Borrower may have record of bad credit.
2.) Borrower cannot verify income.
3.) Mortgaged property may be worth less than the mortgaged amount.
.....a) property in bad repair
.....b) property in bad location

These loans come in many forms--auto loans, credit cards, but the big one is home mortgages. One of the biggest problems is variable rates. Many borrowers fudged their applications and could barely make their payments under the terms of the teaser rate. Then the introductory rate expires and the payment goes up and the borrower can't pay.

For a satirical but accurate video on the Sub-prime Mess, go to the Trading Room and scroll down to the thread titled "Sub-Prime Mortgage Mess Explained". It's a riot, but rings true.

[ghaze]

Subprime = I lend you money without even caring about your income, the value of your house, your health etc. I then dont give you all the information you need to understand that what you will pay for your loan during the 2-3 first year will be multiplied by 3 and you wont be able to pay. Anyway I dont care that you dont pay your loan because I will allready have sold this loan to someone else telling him that it's a very good investment vehicule and he will be carying the risk.

[awsl]

Originally Posted by ghaze

Subprime = I lend you money without even caring about your income, the value of your house, your health etc. I then dont give you all the information you need to understand that what you will pay for your loan during the 2-3 first year will be multiplied by 3 and you wont be able to pay. Anyway I dont care that you dont pay your loan because I will allready have sold this loan to someone else telling him that it's a very good investment vehicule and he will be carying the risk.

This is a great way to make $$ for providing this service!
packaging some garbage and sell it to investors