For those who want to know about sub-prime

[Meecar]

http://news.bbc.co.uk/2/hi/business/7073131.stm

 

 

The US sub-prime crisis in graphics

 

The US sub-prime mortgage crisis has lead to plunging property prices, a slowdown in the US economy, and billions in losses by banks. It stems from a fundamental change in the way mortgages are funded.

 

THE NEW MODEL OF MORTGAGE LENDING

How it went wrong

 

 

Traditionally, banks have financed their mortgage lending through the deposits they receive from their customers. This has limited the amount of mortgage lending they could do.

 

In recent years, banks have moved to a new model where they sell on the mortgages to the bond markets. This has made it much easier to fund additional borrowing,

 

But it has also led to abuses as banks no longer have the incentive to check carefully the mortgages they issue.

 

 

THE RISE OF THE MORTGAGE BOND MARKET

 

In the past five years, the private sector has dramatically expanded its role in the mortgage bond market, which had previously been dominated by government-sponsored agencies like Freddie Mac.

 

They specialised in new types of mortgages, such as sub-prime lending to borrowers with poor credit histories and weak documentation of income, who were shunned by the "prime" lenders like Freddie Mac.

 

 

They also included "jumbo" mortgages for properties over Freddie Mac's $417,000 (

[Rollagt]

Thks for sharing !

[Tploh]

No sxxt !

 

I better stick to my job as now is just the beginnig of a financial crisis.

 

10 years ago is the Asis Financial Crisis. 10 years later, it is the US sub-prime.

 

The cycle of a financial crisis is every 10 years, if you look back into history.

[Comnao]

you forgot to mention that the banks repackaged the loans into other financial derivatives and sold them to other banks at crazy interest rates ... thereby dragging everybody into the sh!t

[Shull]

the banks self-pwned..

[Nkps]

sub prime issue surface since last yr or the year before and now then u start a thread telling people what is sub prime?

 

well i guess is not late... good efford i muz say

[Clubace]

This sub-prime lending is not just constraint to housing only.

 

Brands like sony, harley davidson, caterpillar all has their own financial arms........to finance pple to purchase their items.

 

If things really go into a tailspin, all will get it.