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The Subprime VirusReckless Credit, Regulatory Failure, and Next Steps$
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Kathleen C. Engel and Patricia A. McCoy

Print publication date: 2011

Print ISBN-13: 9780195388824

Published to Oxford Scholarship Online: April 2015

DOI: 10.1093/acprof:osobl/9780195388824.001.0001

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The Emergence of the Subprime Market

The Emergence of the Subprime Market

(p.15) 2 The Emergence of the Subprime Market
The Subprime Virus

Kathleen C. Engel

Patricia A. McCoy

Oxford University Press

This chapter traces the emergence of subprime lending. Starting from the home mortgage market in the 1970s, when mortgage lending was the sleepy province of community thrifts and banks; it moves on to the first iteration of subprime lending—coined predatory lending—in the 1990s; all that way to the early 2000s when the subprime industry began moving from the fringe to the mainstream as commercial banks, investment banks, hedge funds, insurance companies, and other financial giants realized the profits that could be made. The chapter also discusses why brokers and loan officers wanted to rip-off their customers with high-cost products, and why borrowers agreed to ridiculously expensive subprime loans.

Keywords:   subprime lending, subprime loans, subprime market, brokers, loan officers, borrowers, predatory lending

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