Subprime mortgage crisis

A wave of defaults on U.S. home loans made to borrowers with weaker credit histories that triggered a financial crisis in 2007–2008.

Subprime mortgage: A home loan made to a borrower with a weaker credit history and higher expected risk of default. These loans supplied the defaults that initiated the crisis.
Subprime lending: The extension of credit to borrowers considered more likely to default than prime borrowers. Its rapid expansion supplied the vulnerable loans at the crisis's core.
Global financial crisis: A worldwide financial and economic crisis that intensified in 2008 after failures in credit markets and major institutions. The U.S. mortgage collapse became a central trigger of this broader crisis.
Prime mortgage: A mortgage offered to a borrower who meets conventional standards for strong creditworthiness. Its lower-risk borrower profile contrasts with the loans driving the crisis.
Mortgage-backed security: A security whose payments come from a pool of mortgage loans. Securitization distributed subprime loan risk among investors.
Adjustable-rate mortgage: A mortgage whose interest rate can change over time according to specified terms. Payment increases on some loans strained borrowers when introductory rates expired.
Great Recession: A severe U.S. economic downturn lasting from December 2007 to June 2009. Mortgage losses and financial contraction helped drive the downturn.
Alt-A mortgage: A mortgage category between prime and subprime, often involving limited documentation or other nonstandard features. Alt-A loans also weakened mortgage pools but were distinct from subprime lending.
Collateralized debt obligation: A structured security that pools debt assets and divides their cash flows into prioritized tranches. Some CDOs repackaged mortgage securities and obscured exposure to defaults.
Predatory lending: Lending practices that impose unfair or abusive terms on borrowers. Abusive loan terms left some homeowners especially exposed to payment shocks and default.

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