Introduction

A mortgage is the pledging of a property to a lender as a security for a mortgage loan. While a mortgage in itself is not a debt, it is evidence of a debt. It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.

In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property.

In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property.

subprime lending (also known as B-paper, near-prime, non-prime, or second chance 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 and as of recent events it has become very well known as to why, just look at the current situation of the TSX and the DOW JONES as of July 2008.

As the result of an ongoing lending and credit crisis in the subprime industry, and in the greater financial markets which began in the United States, the controversy surrounding subprime lending has expanded.

Table of Contents

1. Mortgages
2. Mortgage Lender
3. Borrowing for Investment Purposes
4. Tasks of Mortgage Broker
5. The Difference between a Mortgage Broker and a Loan Officer
6. FAQ's
7. TIPS!
8. Solutions and Concepts

Download Your FREE E-Book for Mortgages

Login now, or sign up for FREE membership to download you FREE E-Book!

Address:
200 North Service Rd W
Unit #1, Suite 420
Oakville, ON
L6M 2Y1