Subprime Meltdown: American Housing and Global Financial Turmoil Borrowers with a lower credit score were considered as risky and were called ‘subprime borrowers’. Therefore the interest rates on these loans were higher than the rates given to borrowers with a higher credit rating. In the 1970s it was very difficult for these borrowers to avail loans. They had to apply through conventional lenders for loans insured by the Federal Housing Administration (FHA). The procedure was long and tedious and required a lot of documentation. Early Days: Lenders traditionally offered the fixed 30-year mortgage with no prepayment penalties which were offered by the banks and Savings and Loan Associations (S&Ls) However in the 80s short term interest rates shot up, which meant that the yield on these mortgages fell below the rates paid to depositors. As a result most of the S&Ls failed. This led to the securitization of these mortgages by two Government Sponsored Agencies named Fannie......

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Title: Subprime Meltdown
Approximate Word Count: 617
Approximate Pages: 3 (250 words per double-spaced page)

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