¶ … Prime Mortgages

Subprime lending is by definition:

The pervasive practice of making loans at higher interest rates and more aggressive payback terms to those with lower credit

Loans made above the market interest rates

The practice of lending to a Subprime borrower with a FICO score below 620

Loans that are structured for the maximum security of the lender and the maximum liability of the borrower

All the above a, B, C

The answer is F

It is estimated that this percentage of mortgages in the U.S. are financed through Subprime mortgages:

The answer is C

Consumer rights group represented by Attorney Irv Ackelsberg, in testifying to Congress on the Subprime crises, estimated that this many mortgages will be ultimately effected by the Subprime crisis:

million

The answer is e

Which of the following are examples of sub-prime mortgages:

Interest-only mortgages where interest-only payments are made for the initial years of the loan (2, 5 or 10 years)

Initial fixed-rate mortgages that convert to variable rates, which include the popular 2-28 loan that is 2-year fixed then 28-year adjustable

Pick a Payment Loans where the borrower defines if the payment is going for interest only, thereby making the payment much more affordable for lower income borrowers

Adjustable rate mortgages that start at high interest rates based on credit scores and payment histories then fluctuate with the market

All the above the answer is E

According to LoanPerformance market research firm there are:

Approximately 1 million Subprime borrowers and 70% of them will have their mortgages reset to higher interest rates before the end of 2008.

Approximately 2 million Subprime borrowers and 80% of them will have their mortgages reset to higher interest rates before the end of 2008.

Approximately 3 million Subprime borrowers and 90% of them will have their mortgages reset to higher interest rates before the end of 2008.

Approximately 4 million Subprime borrowers and 75% of them will have their mortgages reset to higher interest rates before the end of 2008.

Approximately 4.5 million Subprime borrowers and 85% of them will have their mortgages reset to higher interest rates before the end of 2008.

The answer is C