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. These loans are characterized by higher interest rates 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 borrowers, who have weakened credit histories and a greater risk of loan default than prime borrowers. As people become economically active, records are created relating to their borrowing, earning and lending history. This is called a credit rating, and although covered by privacy laws the information is readily available to people with a need to know (in some countries, loan applications specifically allow the lender to access such records). Subprime borrowers have credit ratings that might include:

limited debt experience (so the lender's assessor simply does not know, and assumes the worst), or

no possession of property assets that could be used as security (for the lender to sell in case of default)

excessive debt (the known income of the individual or family is unlikely to be enough to pay living expenses + interest + repayment),

a history of late or sometimes missed payments (morose debt) so that the loan period had to be extended,

failures to pay debts completely (default debt), and

any legal judgments such as "orders to pay" or bankruptcy (sometimes known in Britain as county court judgements or CCJs).

Lenders' standards for determining risk categories may also consider the size of the proposed loan, and also take into account the way the loan and the repayment plan is structured, if it is a conventional repayment loan, a mortgage loan, an endowment mortgage, an interest only loan, a standard repayment loan, an amortized loan, a credit card limit or some other arrangement. The originator is also taken into consideration. Because of this, it was possible for a loan to a borrower with "prime" characteristics (e.g. high credit score, low debt) to be classified as subprime.

Student loans

In some countries student loans are considered subprime, perhaps because of school drop-outs. In America, the amount of student loan debt recently surpassed credit card debt. In other countries such loans are underwritten by governments or sponsors. Many student loans are structured in special ways because of the difficulty of predicting students' future earnings. These structures may be in the form of soft loans, income-sensitive repayment loans, income-contingent repayment loans and so on. Because student loans provide repayment records for credit rating, and may also indicate their earning potential, student loan default can cause serious problems later in life as an individual wishes to make a substantial purchase on credit such as purchasing a vehicle or buying a house, since defaulters are likely to be classified as subprime, which means the loan may be refused or more difficult to arrange and certainly more expensive than for someone with a perfect repayment record.

United States

Although there is no single, standard definition, in the United States subprime loans are usually classified as those where the borrower has a FICO score below 640. The term was popularized by the media during the subprime mortgage crisis or "credit crunch" of 2007. Those loans which do not meet Fannie Mae or Freddie Mac underwriting guidelines for prime mortgages are called "non-conforming" loans.

A borrower with an outstanding record of repayment on time and in full will get what is called an A-paper loan. Borrowers with less-than-perfect credit 'scores' might be rated as meriting an A-minus, B-paper, C-paper or D-paper loan, with interest payments progressively increased for less reliable payers to allow the company to 'share the risk' of default equitably among all its borrowers. The value of U.S. subprime mortgages was estimated at $1.3 trillion as of March 2007, with over 7.5 million first-lien subprime mortgages outstanding.

Subprime crisis

The subprime mortgage crisis arose from 'bundling' American subprime and American regular mortgages which were traditionally isolated from, and sold in a separate market from prime loans. These 'bundles' of mixed (prime and subprime) mortgages were the basis asset-backed securities so the 'probable' rate of return looked superb (since subprime lenders pay higher premiums, and the loans were anyway secured against saleable real-estate, and so, theoretically 'could not fail'). Many mortgages had a low interest for the first year, and poorer buyers 'swapped' regularly at first, but finally such borrowers began to default in large numbers. The inflated house-price bubble burst, property valuations plummeted and the real rate of return on investment could not be estimated, and so confidence in these instruments collapsed, and all were considered to be almost worthless toxic assets, regardless of their actual composition or performance.

To avoid high initial mortgage payments, many subprime borrowers took out adjustable-rate mortgages (or ARMs) that give them a lower initial interest rate. But with potential annual adjustments of 2% or more per year, these loans can end up costing much more. So a $500,000 loan at a 4% interest rate for 30 years equates to a payment of about $2,400 a month. But the same loan at 10% for 27 years (after the adjustable period ends) equates to a payment of $4,220. A 6-percentage-point increase (from 4% to 10%) in the rate caused slightly more than a 75% increase in the payment. This is even more apparent when the lifetime cost of the loan is considered (though most people will want to refinance their loans periodically). The total cost of the above loan at 4% is $864,000, while the higher rate of 10% would incur a lifetime cost of $1,367,280.

See also

Amortization (business)

Collateral (finance)

Endowment mortgage

Graduated payments

Microcredit

Mortgage loan

Soft loan

Student loan default

References

External links

J F Bellod, "La Crisis Imposible"

Wolves Feeding On Bailout NPR.com

"The subprime wolves are back". ''Businessweek''.

Workers Say Lender Ran 'Boiler Rooms' Michael Hudson and E. Scott Reckard, Los Angeles Times, Feb. 4, 2005.

"Sub-Prime Trail of Deceit" The Cleveland Plain-Dealer investigation into the complicity of lenders in the Cleveland foreclosure mess. May 2008

"From Sub-Prime to Prime-Time - A Debate on the Current Financial Crisis" A panel of economists at Columbia University, School of International and Public Affairs, Feb 28, 2008.

Category:Mortgage Category:Financial economics Category:Interest rates Category:Personal finance Category:United States housing bubble

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Name	Gerald Celente
Birth date	November 29, 1946
Birth place	The Bronx, New York City, New York, U.S.
Occupation	Trend forecaster
Nationality	American
Ethnicity	White
Parents	}}

Gerald Celente (born November 29, 1946) is an American trend forecaster, publisher of the ''Trends Journal'', business consultant and author who makes predictions about the global financial markets and other events of historical importance. Celente has described himself as a "political atheist" and "citizen of the world". He has appeared as a guest on television news shows such as ''The Oprah Winfrey Show'', ''The Today Show'', ''Good Morning America'', ''CBS Morning News'', ''The Glenn Beck Show'', ''NBC Nightly News'', ''The Alex Jones Show'' and ''Russia Today''.''

Background

Celente was born in The Bronx, New York City, New York. He had early political experience running a mayoral campaign in Yonkers, New York and served as executive assistant to the secretary of the New York State Senate, which Celente called the worst job he ever had. From 1973 to 1979 Celente traveled between Chicago and Washington D.C. as a government affairs specialist. In 1980 Celente founded The Trends Research Institute (at first called the Socio-Economic Research Institute of America), now located in Kingston, New York, publisher of the ''Trends Journal'' which forecasts and analyzes business, socioeconomic, political, and other trends.

Forecasting

His forecasts since 1993 have included predictions about terrorism, economic collapses and war. More recent forecasts involve fascism in the United States, food riots and tax revolts. Celente has long predicted global anti-Americanism, a failing economy and immigration woes in the U.S. In December 2007 Celente wrote, "Failing banks, busted brokerages, toppled corporate giants, bankrupt cities, states in default, foreign creditors cashing out of US securities ... whatever the spark, the stage is set for panic in the streets" and "Just as the Twin Towers collapsed from the top down, so too will the U.S. economy ... when the giant firms fall, they’ll crush the man on the street." He has also predicted tax revolts. In November 2008 Celente appeared on Fox Business Network and predicted economic depression, tax rebellions and food riots in the United States by 2012. Celente also predicted an "economic 9/11" and a "panic of 2008."

In 2009 Celente predicted turmoil which he described as "Obamageddon" and he was a popular guest on conservative cable-TV shows such as ''Fox News Sunday'' and Glenn Beck's television program. In April 2009 Celente wrote, "Wall Street controls our financial lives; the media manipulates our minds. These systems cannot be changed from within. There is no alternative. Without a revolution, these institutions will bankrupt the country, keep fighting failed wars, start new ones, and hold us in perpetual intellectual subjugation." He appeared on the ''Glenn Beck'' show and criticized the U.S. stimulus plan of 2009, calling government controlled capitalism "fascism" and saying shopping malls in the U.S. would become "ghost malls." Celente has said, "smaller communities, the smaller groups, the smaller states, the more self-sustaining communities, will 'weather the crisis in style' as big cities and hypertrophic suburbias descend into misery and conflict," and forecasts "a downsizing of America."

Revolution in the USA

On Russia Today, he predicted that the USA would face a revolution.

Neosurvivalism

Celente's website has stated that:

Predictions

2009

"The Crash of '09 was as dramatic as the crash of '29. The New Depression had begun." (Trends Journal, Summer 2008, pg. 12)

2010

Some areas of the U.S. are experiencing resurgences in real estate values due to highly localized factors, and some investors profit from this. However, the rises will almost all stop and reverse with time, and the overall national trend in real estate values is downward. (T.J. Summer 08, pg. 8)

Ghost malls have become a common sight across America. Especially hard-hit are big chain stores (Sears, Home Depot, etc.). (T.J. Summer 08, pg. 8)

2011

Developers have begun rehabbing some of the ghost malls for more productive uses. (T.J. Summer 08, pg. 9)

2012

The economic policies of the U.S. government over the past few years have failed to fix America's fundamental problems and have merely papered over them and in fact made them worse. By 2012, the "American Empire" is collapsing. In the U.S., basic staple goods like quality food and water are too expensive for most people to afford,(T.J. Summer 08, pg. 1) and "food riots" happen across the country (T.J. Summer 09, pg.1). Major American cities look like disaster zones, and mass homelessness exists across the country. Crime is rampant, with much of it being directed at the rich. (T.J. Summer 08, pg. 1) Kidnappings and ransomings of rich people are on the rise. Average people fed up with big government, high taxes and out-of-control spending join tax revolts. (T.J. Summer 09, pg. 1) The world is also experiencing major environmental problems and "the blackest of plagues." The global financial system has also "melted down" and the situation is very bad outside the U.S.(T.J. Summer 08, pg. 1) The advanced industrial economies collapse first, and their sagging consumer spending drags down the export-based economies of emerging economies next.(T.J. Summer 09, pg. 2) The economy is as bad as it was during the Great Depression in many ways. In spite of all this, the U.S. government, power elites, and mainstream media continue to insist that the fundamentals of the world economy are sound, and that official policies can lead to a recovery. A growing number of average people, however, doubt this. (T.J. Summer 08, pg. 1)

While the Mayan and Hopi prophecies of global destruction do not come to pass, 2012 is indeed a watershed year that sees the death of an ailing and unsustainable global economic system and lifestyle and its replacement with something better. (T.J. Summer 08, pg. 2)

By 2012, Obama is viewed by most as a stale president who sold himself as a fresh, visionary candidate in 2008 and instead proved to be a servant of the big corporations and the military-industrial complex like his predecessors.(T.J. Summer 09, pg. 5) His economic policies only delayed disaster and in fact have made the situation worse: Expansionary monetary policy and the various government bailouts and stimulus programs create a "Bailout Bubble" that invariably bursts in a cataclysm for the U.S. and world economy.(T.J. Summer 09, pg. 11) Obama blames other factors for this and might have even tried to start a war by 2012 to distract attention from the domestic misery.(T.J. Summer 09, pg. 12) Obama's foreign policy has also failed to accomplish anything significant on the world stage, and Pakistan is a mess and the Afghan war continues to drag on without hope of conclusion.(T.J. Summer 09, pg. 12)

In the 2012 U.S. elections, online news sites, bloggers and independent journalists wield as much influence on voters as mainstream media outlets (TV, cable, magazines, newspapers) for the first time. This breaks the corporate and moneyed stranglehold on American politics and allows a third party to attain nation-level recognition. (T.J. Summer 08, pg. 5)

Broad future trends

Americans will adapt to lower standards of living and will travel less, both on a daily basis and for vacations. Higher fuel costs, advances in telecommuting and an aging American population will push many more people to work from home or close to home. Walking-distance communities will be constructed and will become popular. (T.J. Summer 08, pg. 7)

Geographically isolated resort destinations like Las Vegas will wither due to higher fuel costs, lower American incomes and increased overseas competition while vacation spots closer to population centers will revive. (T.J. Summer 08, pg. 9)

Government-run lotteries, on the other hand, will thrive. (T.J. Summer 08, pg. 9)

In America and to a lesser extent overseas, consumer spending habits will be motivated out of fear and escapism. Businesses that capitalize upon this will succeed. (T.J. Summer 09, pg. 24)

Publications

''Trend Tracking: The System to Profit from Today's Trends'' (1991), ISBN 978-0446392877

''Trends 2000: How to Prepare for and Profit from the Changes of the 21st Century'' (1997), ISBN 978-0446519014

''What Zizi Gave Honeyboy: A True Story about Love, Wisdom, and the Soul of America'' (2002), ISBN 978-0066212661

References

External links

trendsresearch.com

geraldcelente.com

Category:1946 births Category:Living people Category:American economics writers Category:Futurologists Category:People from the Bronx

de:Gerald Celente fr:Gerald Celente pl:Gerald Celente fi:Gerald Celente sv:Gerald Celente

name	Greg Morris
birthname	Francis Gregory Alan Morris
birth date	September 27, 1933
birth place	Cleveland, Ohio, U.S.
death date	August 27, 1996
death place	Las Vegas, Nevada, U.S.
occupation	Actor
yearsactive	1963–1995
spouse	Leona Keyes (1956–1995)
children	Phil MorrisIona MorrisLinda R. Morris
website	}}

Francis Gregory Alan "Greg" Morris (September 27, 1933 – August 27, 1996) was an American television and movie actor.

Born in Cleveland, Ohio, Morris began his acting career in the 1960s making guest appearances on many TV shows such as ''The Twilight Zone'' and ''Ben Casey''. In 1966, he was cast in his most recognizable role as the electronics expert Barney Collier in the TV series ''Mission: Impossible''. Morris, Peter Lupus and Bob Johnson were the only actors to remain with the series throughout its entire run.

While in college, Morris was active in theater and hosted the late afternoon Jazz radio show, "Tea-Time," on the University of Iowa's station, WSUI. He co-produced concerts at the University with a student friend. After Iowa, Greg's first professional stage role was in ''The Death of Bessie Smith.'' One of his earliest television roles was a cameo appearance on ''The Dick Van Dyke Show'', when Rob and Laura think they've gotten the wrong baby from the hospital. In the 1963–1964 season, he appeared on ABC's drama about college life, ''Channing'', starring Jason Evers and Henry Jones.

After ''Mission: Impossible'' was cancelled, Morris appeared in movies and made guest TV appearances before he was cast as Lt. David Nelson during the second season of the TV series ''Vega$''. After the cancellation of the series in 1981, Morris continued to make guest TV appearances in the next decade, including a few episodes in the short-lived 1980s remake of the ''Mission: Impossible'' TV series, which starred his son Phil Morris, who was cast as Grant Collier, the son of Barney. He also appeared in a couple of episodes of the TV series ''What's Happening!!'' as Lawrence Nelson (father of Dwayne) and in three episodes of ''The Jeffersons'', in which he reprised his role of an electronics expert (although not as Barney Collier) in a quasi-spoof of the ''Mission: Impossible'' series.

Morris died in 1996 of brain cancer in Las Vegas, Nevada. Shortly before his death, he went to see the film version of ''Mission: Impossible'' that starred Tom Cruise. The reports were that he disliked the movie so much (an opinion that was shared by several of his former co-stars) that he left the theater early. According to The Associated Press, he said of the movie: "It's an abomination."

References

External links

'Mission: Impossible' actor dies

Category:1933 births Category:1996 deaths Category:African-American actors Category:American television actors Category:Deaths from brain cancer Category:Actors from Ohio Category:People from Cleveland, Ohio Category:University of Iowa alumni Category:Cancer deaths in Nevada

de:Greg Morris es:Greg Morris fr:Greg Morris