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(April 2013)| In finance, subprime lending (also referred to as
near-prime, non-prime, and second-chance lending) means making
loans to people who may have difficulty maintaining the
repayment schedule, sometimes reflecting setbacks such as
unemployment, divorce, medical emergencies, etc.. These loans
are characterized by higher interest rates, poor quality
collateral, and less favorable terms in order to compensate for
higher credit risk. Proponents of subprime lending maintain that
the practice extends credit to people who would otherwise not
have access to the credit market. Professor Harvey S. Rosen of
Princeton University explained, "The main thing that innovations
in the mortgage market have done over the past 30 years is to
let in the excluded: the young, the discriminated-against, the
people without a lot of money in the bank to use for a down
payment." Defining subprime risk The term subprime refers to the
credit quality of particular borrow