The “Sub Prime Market” fiasco

The “Sub Prime Market” fiasco
The whole program was underwritten, to ensure that investors got their money back (unfortunately, we may know better, now).Well, initially underwriting guidelines became less stringent, meaning that there were lots of different financial products i.e. mortgages available. But then the sub-prime issue took hold.
In themselves, the different financial products which started to swamp the market and the relaxation of underwriting policies need not have caused a huge problem for the housing market. But one thing fundamentally changed about how mortgages were issued, and that was to whom they were issued.
Mortgages became readily available, and the number of applications soared tremendously. Suddenly the main criterion for obtaining a mortgage was not a strong credit history. Appraisal of the potential owners’ financial status or ability to repay the mortgage was no longer seen as being that important.
These people are called the sub-prime market. The term is derived from a poor quality cut of meat, which is referred to as sub-prime since it is not the best - and in this way, the people who were obtaining the mortgages were not the ideal candidates for large amounts of credit: they were effectively sub prime.