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SUBPRIME MORTGAGE LOANS

SUBPRIME MORTGAGE LOANS. http://www.youtube.com/watch?v=q8hjUei-Nwo&feature=related. What is a subprime mortgage loan?. A subprime mortgage loan is a type of loan that is given to an individual with less than perfect credit.

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SUBPRIME MORTGAGE LOANS

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  1. SUBPRIME MORTGAGE LOANS http://www.youtube.com/watch?v=q8hjUei-Nwo&feature=related

  2. What is a subprime mortgage loan? A subprime mortgage loan is a type of loan that is given to an individual with less than perfect credit. Lenders lure in these types of borrowers by offering a low fixed interest ratein the beginning that changes later.

  3. WHY IS THIS A CRISIS?

  4. RISK V. BENEFIT BORROWER • Variable Interest Rates • Possibility of foreclosure • Low fixed rate to begin with • People with less than perfect credit can buy houses LENDER * Potential profit * High default percentages!

  5. CREDIT CYCLE Borrowers and lenders put themselves into debt and then overcompensate trying to fix things Ultimately finding no balance only the two extremes.

  6. MAJOR CAUSES: • Human Race • Public Policy • Wall Street

  7. EFFECTS: • Housing Market Downwards Spiral • Federal Intervention • Economic Recession

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