Contributing factor to the recent housing bubble

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Subprime lending is thought to be a contributing factor to the recent housing bubble. Which of the following is an example of subprime lending?

A. Bradley is a first-time homebuyer who does not enough money for the usual 20% required for a down payment. Nonetheless, a bank offers Bradley a loan because his income is sufficient and home prices have historically increased.

B. Jurgen wants to purchase a home and is hoping to minimize his monthly mortgage payments. The bank offers Jurgen an adjustable rate loan which has a lower initial rate but will potentially increase in the future.

C. Chris is a real estate tycoon. He owns many homes and apartment complexes. Because he owns so many properties, he is particularly vulnerable to fluctuations in the real estate market. His bank is willing to loan him more money despite this risk.

D. Vincenzo does not have sufficient income to afford the payments on the mortgage for which he is applying. However, Vincenzo\'s older and wealthier girlfriend has agreed to co-sign the loan. The bank agrees to loan Vincenzo more than he can afford to repay because of existence of his co-signer.

Reference no: EM13834781

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