Subprime

I kept hearing about "subprime loans" and tuned out because I didn't know what they were. Here is what Wikipedia says. Guess it's not that complicated. They're loans that generally were being made to risky borrowers. And it came home to roost.

"In general, subprime lending is lending at a higher rate than the prime rate. However, in U.S. mortgage lending specifically, the term "subprime" simply refers to loans that do not meet Fannie Mae or Freddie Mac guidelines.
It may or may not reflect credit status of the borrower as being less than ideal and may not even reflect the interest rate on the loan itself. The phrase also refers to bank loans taken on property that cannot be sold on the primary market, including loans on certain types of investment properties and to certain types of self-employed persons.
Subprime lending is risky for lenders and occasionally for borrowers also, due to the combination of high interest rates, frequently poor credit histories, and potentially adverse financial situations that are sometimes associated with subprime applicants. A subprime loan is offered at a rate higher than A-paper loans due to the perceived increased risk. Subprime lending encompasses a variety of credit instruments, including subprime mortgages, subprime car loans, and subprime credit cards.
Subprime lending is highly controversial. Opponents allege so-called subprime lenders engaged in predatory lending practices such as deliberately targeting borrowers who could not understand what they were signing, or lending to people who could never meet the terms of their loans. Many of these loans included exorbitant fees and hidden terms and conditions, and they frequently led to default, seizure of collateral, and foreclosure."