betsy

Trudeau housing budget - is it like subprime lending that led to the economic crisis?

"In finance, subprime lending (also referred to as near-prime, subpar, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc.^[1] Historically, subprime borrowers were defined as having FICO scores below 600, although "this has varied over time and circumstances."^[2]

These loans are characterized by higher interest rates, poor quality collateral, and less favorable terms in order to compensate for higher credit risk.^[3]

Many subprime loans were packaged into mortgage-backed securities (MBS) and ultimately defaulted, contributing to the financial crisis of 2007–2008.^["

https://en.wikipedia.org/wiki/Subprime_lending