Answer / rishabh jain

Sub prime crisis - The banks started giving loans to more and more people at sub prime rates (above market rate) because the borrowers were not having good credit history. More people were given loans at subprime rate because the agents had to meet their targets set by the banks and subprime loans doesn't need much of documentation and so easy to disburse. now after a limit the borrowers started defaulting i.e. they refused to give their loans because many people invested their money in real states whose prices started falling and the borrowers incurred losses and their income was not sufficient to payback loans.
(i have explained this in very short, there are many other things associated with crisis. if you wanna know more contact me at jain.rishabh.84@gmail.com)

Answer / chaitanya

The term “subprime” refers to the credit status of the
borrower (being less than ideal), not the interest rate on
the loan itself. “sub prime” is any loan that does not meet
“prime” guidelines. If your mid fico score is below 620 and
you have any mortgage rates within 12 months or recent
BK/foreclosure, you are considered “sub prime”.

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