What is subprime? | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

The Subprime to the ridiculous. 10 replies

Subprime Worries 123 replies

The truth about the markets & subprime... 2 replies

Is there anybody who can describe this crisis of subprime mortagage 2 replies

US has subprime problem, but why USD strengthen? 4 replies

What is subprime?

  • #1
  • First Post: Nov 23, 2007 11:12pm Nov 23, 2007 11:12pm
Hi,

I'm a newbie. I heard every where people mentioned "Subprime". What is subprime actually?

Thanks.

M.D.
  • #2
  • Nov 24, 2007 12:33am Nov 24, 2007 12:33am
"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.
  • #3
  • Nov 24, 2007 11:06am Nov 24, 2007 11:06am
Quoting billflet
"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.

many thanks and appreciated for your reply.

Thanks!
  • #4
  • Nov 24, 2007 7:11pm Nov 24, 2007 7:11pm
this subprime crisis only apply in UK right?
  • #5
  • Nov 24, 2007 11:47pm Nov 24, 2007 11:47pm
Quoting McDonald
this subprime crisis only apply in UK right?
Nope, we hold the Biggest Offender title here in the U.S.
  • #6
  • Nov 25, 2007 12:14am Nov 25, 2007 12:14am
i am begginning to agree....this whole mess is psychological....could be wrong but mass & media, if histories right, are always wrong like bitch in the long run.
{Promotion Removed}
  • #7
  • Nov 25, 2007 12:31am Nov 25, 2007 12:31am
Quoting jjk2
i am begginning to agree....this whole mess is psychological....could be wrong but mass & media, if histories right, are always wrong like bitch in the long run.
I crack up every time I see that signature. I remember when you acquired it.
  • #8
  • Nov 25, 2007 12:48am Nov 25, 2007 12:48am
im selling a t-shirt of it too. pm for details.
{Promotion Removed}
  • #9
  • Nov 29, 2007 12:49am Nov 29, 2007 12:49am
sub prime =)

http://www.goldmau.com/content/artic...1-23/comic.php
  • #10
  • Nov 29, 2007 1:49am Nov 29, 2007 1:49am
Now that the question's been answered,



what is the Matrix?
  • #11
  • Nov 29, 2007 1:54am Nov 29, 2007 1:54am
Quoting dunningduke
Now that the question's been answered,



what is the Matrix?
The matrix...oh that's easy...

[]

there ya go... that's the matrix... most people use it to solve systems of equations, but you can really do anything you want with the matrix

EXAMPLE:

[0101010110101010]
[-.-]
[/\/\/\/\]
[0(_)0]
[AnYtHiNg]
  • #12
  • Nov 29, 2007 7:27am Nov 29, 2007 7:27am
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.
  • #13
  • Last Post: Nov 29, 2007 9:19am Nov 29, 2007 9:19am
Quoting melpheos
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.
Excellent summary.
0 traders viewing now