Basically, its a home loan at a higher rate given to someone who cant even afford it at the standard rate.
It works by giving the borrower a lower rate for the first 12mths so that when the borrower finally defaults, hopefully, the house has gone up in value and when sold can give the lender his cash back and the broker his cut too.
Too bad when a housing slump happens. That's when we call it a sub-prime mess which is what we have now.
silly question..wot exactly is a subprime loan, page-10
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