Talk:Subprime lending

message: I have gone through and cleaned up the intro, but this article still needs a lot of TLC. Since we now have some front-page exposure for this article, I'm hoping some more volunteers will help get this article into better shape. 70.105.70.249 03:34, 12 August 2007 (UTC)
thread_title:  Revised intro 

message: There is much effort in this article to be diplomatic - but at the expense of the article: for example, it is said that subprime loans are risky... 
All loans are risky, the difference is in the greater expectation of risk. Also, it was too much emphasis on credit history of the borrower - yet, in reality there are many factors that can result in B-paper loan status (a business owner may have excellent credit and income, but may have more difficulty documenting that income, and so on, and so forth)  —Preceding unsigned comment added by Blablablob (talk • contribs) 05:09, 20 August 2008 (UTC)
thread_title: More objective, Better informed, Better wording

message: Could someone explain why it is called Sub-prime? As discussed in the article, the rates typically charged are significantly above the prime rate. Why isn't it called "Super-prime"?
The subprime refers not to the rates, but to the borrower him- or herself, and also to the conditions under which the money is borrowed.  He or she is a less-than-ideal candidate for a loan, and therefore subprime
*i have added this to the intro
This is not the case - and is a common misconception. The fact is, many sub prime loans are given to people with solid credit.  —Preceding unsigned comment added by 71.170.108.39 (talk) 17:17, 31 March 2008 (UTC)
replies: text: I thought that sub-prime (as in sub-prime mortgage) meant that the mortgage rate was below-prime - perhaps (or always?) only for the first few years of the term - after which case the rate would increase and exceed the prime rate in the latter years of the term?  In which case, the recent sub-prime crisis was triggered because the initial sub-prime rate period for those first mortgages issued like this had expired and people were now looking at substantially higher payments, which many couldn't afford and hence the default or bankrupcy rate took off? —Preceding unsigned comment added by 65.92.8.170 (talk) 12:37, 2 September 2007 (UTC)
replies: text: I worked on setting up subprime lending businesses in the UK about ten years ago and my understanding is that subprime relates to the customer category. There may indeed by some customers who might get prime rates, but that doesn't alter the fact that these products were introduced to sell into less attractive customer segments  —Preceding unsigned comment added by 62.190.111.65 (talk) 15:56, 28 April 2008 (UTC)
replies: text: Should we add a citation for the definition?  I always thought it referred to the interest rate being (usually only temporaily) below the prime interest rate.  But here's a citation for the definition which matches the meaning used in the article: http://banking.about.com/od/loans/g/subprime.htm Tim Bird (talk) 17:55, 30 September 2008 (UTC)
replies: text: Under Subprime crisis please clarify: "poorer buyers 'swapped' regularly at first".  Swapped what? Unpayable mortgages for new mortgages as prices rose?  — Preceding unsigned comment added by 108.6.105.192 (talk) 00:30, 20 July 2011 (UTC)
thread_title:  Definitional issues 

message: i am moving, merging, and renaming the various articles we have on this topic into this article, please feel free to start working on this again as we need citations and references for the existing content Emax0 03:20, 14 March 2007 (UTC)
replies: text: Just for GFDL history purposes, it appears this article was merged from sub-prime lending and subprime.  If someone feels up to it, a history merge could be done from subprime, but it's not a big deal I guess.  --Interiot 18:43, 14 March 2007 (UTC)
replies: text: I suggest moving the information about the people and their credit ratings out of the intro an into credit score (USA). If no one else does it, I'll put this on my to-do list. --Uncle Ed 18:06, 23 March 2007 (UTC)
thread_title:  new page 

message: I've rewritten this section, but some references are still necessary. I removed a lot of the personal advice a previous contributor had made. I also renamed the section from "Controversy" to what it is now. Hopefully this helps a bit-
Vince 17:08, 14 March 2007 (UTC)
thread_title:  Re-establishing Personal Credit Page 

message: The article currently doesn't address a notable factor in the phenomenon, which is that the subprime loans are typically sold off to other investors, shifting risk away from the loan writer and creating incentive to write bogus loans.  Here is a Wapo article with some explanation. 64.160.39.153 01:13, 16 March 2007 (UTC)
thread_title:  expansion badly needed

message: I rated this article top priority in the business and economics wikiproject due to its recent widespread use in the news.--Vince 18:02, 16 March 2007 (UTC)
thread_title:  Importance Rating 

message: The article should make clear in some parts (especially the problems section) that it's referring to conditions specific to the USA.--Shtove 15:14, 30 March 2007 (UTC)
replies: text:  It is true that this subject needs to be covered in a more 'global' way.  Its a common criticism that many articles written by US contributors tend to lack perspective, seeming slightly insular to other readers and sometimes there is a tendency to make assumptions based on US definitions (say, what a person thinks the word 'liberal' means in politics may be wildly different in two different countries.
However the current crisis does seem to be becoming critical in the USA, and there can be no doubt that whether or not institutions outside the US have less exposure to this type of financing, they will feel the ripple effect.  The Bank Of England has made a statement to the effect that if financial institutions think they are going to be bailed out then they are in for a rude awakening as they will not 'be rewarded' for irresponsible lending.  Several large European institutions are heavily exposed in the USA, and anyway financial markets seldom function in a logical way when the chips are down.
The BoE statement (which they're backpeddling away from now of course) is a bit misleading. I'm not convinced that the banks that bought the subprime mortgage backed instruments really considered these as 'lending'. They have certainly not applied any of the controls over these instruments that would have been expected over UK mortgage lending.
I don't know what will happen, but I'm putting every penny I have into paying off as much of my mortgage as possible - short of putting my kids on bread and water. PrivateWiddle 01:35, 13 August 2007 (UTC)
thread_title:  Specify USA 

message: I really agree with Vince that this is a high priority article.  It is hard to read a newspaper right now without seeing an article on this subject.  I added a section about the recent crisis in the U.S.  I welcome thoughts about how to improve it.  There is another article on the site called Subprime meltdown.  It is sparse on details of the crisis, and really only focuses on the impact on the lenders.  I wonder if people have thoughts as to whether some  of this discussion should  be moved to that article, or whehter the information in subprime meltdown should be incorporated into the subprime lending article.  I prefer the latter, as I don't think people will search for subprime meltdown as much as subprime crisis or subprime lending,  but that is just my 2 cents. Thanks.  --Mackabean 16:11, 10 April 2007 (UTC)
replies: text: Since the Meltdown is the current event, not the lending itself, should the current event tag get moved to the Meltdown page?  CodeCarpenter 19:44, 23 April 2007 (UTC)
replies: text: Yes, I think the tag should be moved.  Good suggestion. Would you mind doing it? --Mackabean 06:43, 24 April 2007 (UTC)
thread_title:  USA crisis 2006-2007 

message: Hey it is Random.  How about a Reference Section.  Yes or No. --Random Say it here! 20:05, 19 April 2007 (UTC)
replies: text: Totally.  I actually was just looking around to see why the notes aren't showing up.  Do you know how to fix that?
I have not been able to fix the problem. I'm going to bring in a pro. Okay?
--Random Say it here! 22:59, 19 April 2007 (UTC)
thread_title:  Mackabean 

message: I have recently cut down and tried to summarize the section on the Subprime lending#U.S. subprime mortgage crisis. This crisis already has its own page at subprime meltdown and i think it is a big enough subject to centralize information on the crisis over there. In addition, much of the info on this page was repeated verbatim on the subprime meltdown page. I have done my best to summarize the high points of the crisis for this page, but welcome thoughts about major points that I missed.  Thanks!!--Mackabean 20:10, 19 April 2007 (UTC)
thread_title:  Subprime mortgage crisis 

message: Couple minor things
Under the Mortgage Discrimination section there.  This is a run-on sentence:
Black and other minorities disproportionately fall into the category of "subprime borrowers", even when median income levels were comparable, 46% of home buyers in the African American Neighborhood of Jamaica Queens New York received loans from sub-prime lenders while only 3.6% of those in a predominantly white Bay Ridge, Brooklyn received a loan from a subprime lender.
This sentence probably needs a date included so we know the chronological relevance of the statement:
The NAACP filed a lawsuit in federal court in Los Angeles against 12 mortgage lenders.
Also, I added the last sentence about association/causation to point out that the survey as represented in the article does not necessarily (although it certainly indicates the possibility) show racial discrimination.
best - jtp  —Preceding unsigned comment added by 137.190.194.20 (talk) 15:07, 8 June 2009 (UTC)
thread_title: Criticisms of subprime lending

message: I removed the second sentence of this paragraph, because it was not supported by the bloomberg cite. I also adjusted the first sentence to match the cite. I skimmed the main article Subprime mortgage crisis but found nothing that explicitly claimed the "drive down home values" or "homeowners feel less wealthy" speculations. In fact that main article's leadin appears to be more solidly written - maybe this subsection needs a larger update?
Some economists, including former Federal Reserve Board chairman Alan Greenspan, have expressed concerns that the subprime mortgage crisis will affect the housing industry and even the entire U.S. economy. In such a scenario, anticipated defaults on subprime mortgages and tighter lending standards could combine to drive down home values, making homeowners feel less wealthy and thus contributing to a gradual decline in spending that weakens the economy.Strasburg, Jenny. "Subprime Defaults to Soar, Hurt Lenders, Funds Say". Bloomberg.com, March 15, 2007. Retrieved on April 19, 2007.
-84.222.6.66 (talk) 13:32, 1 April 2008 (UTC)
thread_title: U.S. subprime mortgage crisis

message: This article would benefit from a road map and context.
For example, 
* first: should this article focus on what a subprime loan is, and put crisis material in an other article?
* the Fed lowered interest rates to stimulate the economy, which had a side effect of fueling the housing market - arguably producing regional bubbles and/or a general bubble.
* the time line of the cascade effect
* the role of collateral backed financial instruments in the cascade  —Preceding unsigned comment added by Blablablob (talk • contribs) 06:16, 20 August 2008 (UTC)
thread_title:  Road map and Context 

message: The definition of subprime in this article is factually incorrect:
"In the United States, mortgage lending specifically, the term "subprime" refers to loans that do not meet Fannie Mae or Freddie Mac guidelines.  This is generally due to one for a combination of factors, including credit status of the borrower, income and job history, and income to mortgage payment ratio."  
Which guidelines?  Credit status of the borrower is not a criteria for any of the GSEs.  Are you saying jumbo loans are also subprime?  If this is an actual definition it should be cited.  
I believe subprime in this context refers to the borrower, not the loan itself, and is generally regarded as a borrower with a credit score below a certain level.
Yes, Editor, this article needs a lot of work, I wish I could be of more assistance, but this requires more professional expertise than I can offer. I can only edit from the perspective of one who was wrung through the process several times.
The definition of sub-prime applies to the loan, not the borrower, although the borrower's creditworthiness certainly plays a role; and is much more complex than at the beginning of the article. 
A major definition of "sub-prime" is any loan over a certain dollar limit. At one time it was $200,000, then revised upward to $250,000, then I believe $300,000 in 2007. In California, especially, but also in many other areas, virtually 100% of mortgage loans were "sub-prime" from about 2004 on simply because of the cost of housing in those locales. Also homes that were/are not within certain size and feature parameters can be "sub-prime".
Further, there is too much insinuation that the "problem" with "sub-prime" loans was the fault of the borrower or his/her creditworthiness. In far too many cases, if the loan should have qualified as a prime loan, it was turned into a sub-prime by either the mortgage lender, their rep, or the home builder because they then made significantly higher commission and/or fees than if it were a "prime" loan. Currently, CA Attorney-General Jerry Brown has many under investigation and prosecution.  Jerry Brown, in conjuction with the Attorneys-General of 5 other Western States have filed a multi-Billion dollar lawsuit against at least one international bank for predatory lending practices and loan fraud. There need to be many more (my opinion). 
A former Mortgage Loan executive from a major NYC bank has indicated to me that "sub-prime" mortgage amounted to approximately 15% of the mortgage market. Further, it is now quite evident that it was not massive "defaults" on "sub-prime" mortgages that caused the Meltdown, but the gambling instruments of the financial services sector both in the US and England, which brought on the Worldwide Meltdown. Tgsherer (talk) 19:28, 6 March 2010 (UTC)
thread_title:  Definition of subprime 

message: Why in this article is there no mention of the Community Reinvestment Act of 1977 and its history?  Especially the role of Fannie May in the mid-90's.
Dino1508 (talk) 17:43, 2 October 2008 (UTC)
thread_title: An omission

message: This sentence "Still others have cited government mandated affirmative action based lending in order to increase home ownership among minorities" appears to have been removed from the 'U.S. subprime mortgage crisis' section at the end of this page - where it fits in the flow, makes sense and is factually correct - and somehow dropped into the note 15 of the References (by mistake?). Even though it's not a reference. I've not amended the page, but maybe someone would like to. I'd probably do it wrong, by mistake...
194.66.90.50 (talk) 15:12, 19 January 2009 (UTC)
thread_title: Why's this ended up in 'References' and not in the crisis section?

message: Take a look at these sentences: "This tax give away is what makes America become the most personally indebted nation in the world. Countries like Brazil that do not use nominal interest rates in housing loans, and do not give such tax breaks do not have a prime nor a sub-prime housing problem."
Really? Brazil? Besides the numerous grammatical errors, this clearly is not neutral POV. The term "giveaway," which should be one word here, is prejudicial. Further, the conclusion here does not logically follow (i.e., that the U.S. tax structure "is what makes America become [sic] the most personally indebted nation in the world"). For one thing, I question the characterization of U.S. as "the most personally indebted nation" because (1) there are no citations to any source, and (2) it's not clear what the author means by "personally indebted nation." Even assuming that part made sense, the conclusion -- and the comparison with Brazil -- seems to be a complete non sequitur.
I would delete the sentences entirely, but it looks like they've survived several previous edits here. Why keep it? BK DC (talk) 22:28, 29 January 2009 (UTC)
thread_title: Swipe at US versus Brazil?

message: People must stop editing the definitional related aspects of this topic unless they have a definitive perspective on what subprime actually means.  
I initially re-wrote the introduction to state that subprime referred to the borrower, that there were no specific criteria, but it was generally accepted that it referred to borrowers with a FICO score below a certain level (say 660).  I reached that conclusion as I work in the industry, but accept there may be other thoughts on the matter.  As one piece of evidence to support my conclusion, refer to page 8 of the 2008 10-K of American General Finance, Inc. (a subprime lender):  
"There are many different categorizations used in the consumer lending industry to describe the creditworthiness of a borrower, including “prime”, “non-prime”, and “sub-prime”. While there are no industry-wide agreed upon definitions for these categorizations, many market participants utilize third party credit scores as a means to categorize the creditworthiness of the borrower and his or her finance receivable. Our branch finance receivable underwriting process does not use third party credit scores as a primary determinant for credit decisions. However, for informational purposes, we present below our branch net finance receivables and delinquency ratios grouped into the following categories based solely on borrower Fair Isaac & Co. (FICO) credit scores at the date of origination or renewal:
Prime:  Borrower FICO score greater than or equal to 660; Non-prime:  Borrower FICO score greater than 619 and less than 660; Sub-prime:  Borrower FICO score less than or equal to 619"
The introduction to the article as it read on April 1, 2009, and the background section are currently nonsensical. Whoever is responsible for writing them, please state what you mean by the following phrases which make no sense whatsoever to me:
"involves financial institutions lending to borrowers who do not meet prime underwriting guidelines" - please explain what "prime" underwriting guidelines are.
"Subprime borrowers are more likely not to pay the money back" - This comment is meaningless without context - more likely than who? 
"The Wall Street Journal reported in 2006 that 61 percent of all borrowers receiving subprime loans had credit scores high enough to qualify for prime conventional loans" - please explain the definition of subprime used in the article - the link does not work. 
"The first subprime was initiated in 1993. Many companies entered the market when the prime interest rate was low, and real interest became negative allowing modest subprime rates to flourish; negative interest rates are hand-outs, the more you borrow the more you earn" - this clearly makes no sense whatsoever.  People should not edit articles if they can't write properly.  —Preceding unsigned comment added by 155.201.35.53 (talk) 18:46, 1 April 2009 (UTC)
thread_title:  Stop editing this article if you do not know what subprime is...! 

message: Perhaps it should say "separate market"? -Craig Pemberton (talk) 23:48, 18 October 2009 (UTC)
thread_title:  Agrammatical lead in 

message: In the Government policies page under the Government policies subprime mortgage crisis is an historical fact about the Alternative Mortgage Transactions Parity Act (AMTPA) passed by congress in 1982 which allowed non-fedederally chartered housing creditors to write adjustable-rate mortgages. The new mortgage loans that were created and gained in popularity because of AMTPA were adjustable-rate, option adjustable-rate, baloon-payment, and interest-only mortgages. These new risky loan types are credited with replacing the long standing practice of banks making conventional guaranteed safe fixed-rate mortgages. Yet on the Subprime lending page there is no mention of the AMTPA at all. No mention of the AMTPA history and it's contributing factor into the beginnings of Subprime lending. Where is the Wikipedia consistency and facts which you have come to be known for? 
FYI regarding credibility, it isn't a good idea to allow everyone to come in and edit any information. It is a much better idea that Wikipedia with their oversight itself be the ones to look over the information and decide what is facts and what is not. It is also a good idea that Wikipedia protect the information from being altered. 
One other note, only those of Wikipedia should review the information, and do the editing on the encyclopedia information. There is too much political bias that seems to have spewed into your Subprime lending page which sounds more rhetoric and informative than based on facts. 
Why won't I edit a page? Because I get information from Wikipedia, I do not work for or am employed by wikipedia. Stop allowing just anyone to alter your pages. Just allow for discussion on pages. Angelheart80153 (talk) 15:59, 14 April 2010 (UTC)
thread_title:  Historical facts of Subprime lending 

message: "the known income of the individual or family is unlikely to be enough to pay living expenses, plus interest and repayment;"
Where is the evidence that low income affects the credit rating? 194.207.180.128 (talk) 04:27, 5 December 2023 (UTC)
thread_title:  Income