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Paul Kiesel
Paul Kiesel
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Subprime Voted Word of the Year

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The American Dialect Society recognized subprime as the word of the year. The word subprime is familiar to many, whether they have a subprime mortgage or not, and is connoted with cheap — suspiciously cheap — mortgages. There are several other less than pleasing words associated with the subprime/mortgage crisis that could comprise an entire glossary of words, and that I’ve used in my blogs over the last five months.

Here is a list of what the New York Times describes as, “often-colorful expressions that could be described as sub subprime.”

Exploding ARM – An adjustable-rate mortgage in which the interest rate resets from an affordable monthly payment to one that is as much as three times the amount the following month.

Foreclosure rescue – A scam to steal a home from a borrower facing foreclosure. The expression sounds like someone would be helping the borrower, but in fact it’s a con in which the owner is cajoled into signing over the house’s title in exchange for supposed short or long term economic relief.

Jingle mail – When a borrower, who faces default and is unable to renegotiate their mortgage, sends the keys to the home in the mail to the lender, essentially walking away from the home. (Not every borrower that is foreclosed on does this, however, during the mortgage crisis, this act occurred more than it had in recent years.)

Ninja loan – Definition of a loan that required no income, no job or assets, and in reference to other poorly documented loans made to high-risk borrowers.

Alt-A loans – An “A-paper” loan refers to loans made to prime borrowers (borrowers with excellent credit). Alt-a loans were loans made to borrowers one credit bracket below prime borrowers, and were loans made to “good credit” borrowers who were unable or would not document their finances.

One-stop shop- Predatory lending practice where unsuspecting borrowers are tricked into using one company that offers a realtor, mortgage lawyer, inspector and appraiser.

Toxic waste – The packaging of subprime mortgages into securities that are sold to investors. Toxic waste securities were mostly comprised of subprime loans and were sold to investors looking for higher risk, thus, a potentially larger payout on a higher interest rate.

Upside down or Underwater – “The status of an estimated nine million homeowners who bought during the boom years but now owe more than their houses are worth. Consequently, they are stuck, unable to refinance or to sell even what for what they owe,” (New York Times, 8/17/08).