[Freedom Fighter]

It's someone who has bad credit and can't get a loan so the government steps in and gives the creditor reason to give them a loan. In the US this was done by the CRA.

[Robert Henderson]

No.They love Jimmy Carter and Bill Clinton.

[Mason Dixon]

It's a horrible system, and all three involved parties are too blame: the bank for giving the loan, the government for telling the bank to make the loan, and the debtor for taking a loan they couldn't repay.Most people seem to only be blaming the banks, which is only a third of the equation.

[ideogenetic]

Not true. Nothing in the CRA mandated that a financial institution make loans that were not profitable. Only Wall Street's financial engineering (slicing and dicing bad mortgages and repackaging them with AAA ratings) made bad loans profitable. But it was all based on fictitious capital (see Marx, "Capital", Vol 3, chapter 25, 'Credit and Fictitious Capital') and led to a financial collapse that nearly bankrupted our nation.Interestingly, Fannie and Freddie were late to the game. This was another instance of the failed dynamics of market competition. Wall Street was making billions on their fictitious capital (CDO's, CDS, etc). Fannie and Freddie realized they, too, had to start adding fictitious capital assets to their balance sheets in order to compete.The systemic crisis followed from Wall Street's misguided motives once again.

[NOpublican's in 2012]

Your wrong ,a sub prime mortgage is not backed by the govt, The banks did this to boost profits by charging a higher interest rate and closing fees.