Which of the following was true regarding sub-prime mortgages that were popular in 2005-2006?

Question

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Sub-prime mortgages were typically offered to borrowers with poor credit histories, making them more likely to default on their loans. It was widely expected that default rates on these loans would be higher, which made them riskier for lenders. However, many lenders ignored this risk in their pursuit of profits. Option A is incorrect because a significant portion of sub-prime loans were made by unregulated lenders, including subprime mortgage companies, rather than regulated banks. Option C is incorrect because subprime mortgages often had adjustable interest rates, which could increase over time, making them even riskier for borrowers.

Which of the Following Was True Regarding Sub-Prime Mortgages That