What does subprime mortgage crisis mean….?
Subprime borrowers are people who have a high risk of defaulting on their loans, e.g. people with checkered employment careers, people who have not help employment for long, people who have low incomes, etc. In this particular event, most of the problem is coming from loans made to people who can not afford to make the full repayment onthe loans. In the USA, lenders have a system where people can start loans on low interest rates, a honeymoon period, then after something like two years, the rate goes up to a normal rate. Now a lot of sub-prime borrowers were signed up to these loans. In many cases, the people did not understand the honey moon period, or some claim they were lied to about the rates. What also happened, was the the people/companies making these sub-prime loans, then sold the loan to other investors, such as banks, building societies, local government bodies, superannation funds, large investors, etc. At this point you should be rolling on the floor in laughter. The peopl
