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What is a subprime loan? It depends on whom you ask

Guest perspective: An insider's view on the subprime mess

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Editor's note: Steven Krystofiak offers an insider's take on what's been unfolding in the subprime mortgage industry. But he is no industry apologist. Stay tuned for a series of articles from Krystofiak on Inman News in coming weeks. What constitutes a subprime loan? There is confusion in the industry infatuated with using a word without a proper and uniform definition. Is the decision of whether or not a loan is subprime based on income? How about the type of loan you get? Is it your credit score? Will you be forced to have a prepayment penalty if you get a subprime loan? Is it a term that Wall Street traders use for bond ratings secured by mortgages? Is it the amount of equity that one has in his or her property? I will explore the above questions from an insider's point of view, and hopefully guide you where the frustration lies within this subject. Outsiders looking into the mortgage industry often believe that having a low income means you are forced to get a subprime loan, whic...