TOPIC ONE Briefly describe one of the following kinds of mor

TOPIC ONE: Briefly describe one of the following kinds of mortgage and 1) identify who might benefit from this kind of mortgage and 2) explain why widespread use of this kind of mortgage might create risks for banks

Subprime mortgage

2/28 ARM (or other forms of subprime mortgages that reduce monthly payments e.g. “interest only loans”)

Low doc or no doc loans

NINJA loans

Solution

SUBPRIME MORTGAGE

It is the type of loan which bank provides to the borrower with a low credit score,deficient credit history and who falls into the non elegibility criteria of the conventional mortgages.