Subprime Lending

In finance, subprime lending (also referred to as near-prime, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule. These loans are characterized by higher interest rates, poor quality collateral, and less favorable terms in order to compensate for higher credit risk.

Proponents of subprime lending maintain that the practice extends credit to people who would otherwise not have access to the credit market. Professor Harvey S. Rosen of Princeton University explained, "The main thing that innovations in the mortgage market have done over the past 30 years is to let in the excluded: the young, the discriminated-against, the people without a lot of money in the bank to use for a down payment."

Read more about Subprime LendingDefining Subprime Risk, Student Loans, United States, Canada, Subprime Crisis, See Also

Other articles related to "subprime lending, subprime, lending":

Subprime Crisis Background Information - Subprime Lending
... Deposit Insurance Corporation (FDIC) has defined subprime borrowers and lending "The term subprime refers to the credit characteristics of individual borrowers ... Subprime borrowers typically have weakened credit histories that include payment delinquencies, and possibly more severe problems such as charge-offs, judgments, and ... Subprime loans are loans to borrowers displaying one or more of these characteristics at the time of origination or purchase ...
Government Policies And The Subprime Mortgage Crisis - Government "affordable Homeownership" Policies - Department of Housing and Urban Development (HUD) - HUD Mandates For Affordable Housing
... This resulted in the agencies purchasing subprime securities ... Until relatively recently, "subprime" was praised by at least some members of the U.S ... Edward Gramlich, a former Governor of the Federal Reserve Board, distinguished predatory lending from subprime lending "In understanding the problem, it is particularly important to distinguish predatory lending ...
Subprime Mortgage Crisis - Causes - Role of Fannie Mae and Freddie Mac
... The GSEs participated in the expansion of subprime and other risky mortgages, but they followed rather than led Wall Street and other lenders into subprime lending ... HUD encouraged Fannie and Freddie to loosen lending standards, and that the two GSEs had a major role in creating the subprime mortgage crisis ... For example, some analysts estimate that Fannie's market share of subprime mortgage-backed securities issued dropped from a peak of 44% in 2003 to 22% in 2005, before rising to 33 ...
Late-2000s Financial Crisis - Background - Subprime Lending
... contributed to an increase in the amount of subprime lending during the years preceding the crisis ... sponsored enterprises like Fannie Mae played an important role in the expansion of lending, with GSEs eventually relaxing their standards to try to catch up with the private banks ... promotion of thousands of small mortgage brokers, and by their close relationship to subprime loan aggregators such as Countrywide ...

Famous quotes containing the word lending:

    If there is among you anyone in need, a member of your community in any of your towns within the land that the LORD your God is giving you, do not be hard-hearted or tight-fisted toward your needy neighbor. You should rather open your hand, willingly lending enough to meet the need, whatever it may be.
    Bible: Hebrew, Deuteronomy 15:7,8.