What are the major risk factors inherent with subprime loans and how did these loans contribute to the financial crisis? If you had to contribute responsibility for the financial crisis to one party who would it be?
Expert Answer
SUPREME LOANS:
IS A TYPE OF LOAN OFFERED AT A RATE ABOVE PRIME TO INDIVIDUALS WHO DO NOT QUALIFY FOR PRIME RATE LOANS. A SUBPRIME LOAN IS OFFERED TO PEOPLE WHO DO NOT QUALIFY FOR A CONVENTIONAL LOAN, BECAUSE OF FACTORS LIKE LOW INCOME, A HIGH LOAN-TO-VALUE RATIO OR A POOR CREDIT HISTORY. A SUBPRIME LOAN GENERALLY CARRIES A HIGHER INTEREST
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