Final answer:
Interest Only and Option Adjustable-Rate mortgages were commonly offered to subprime borrowers; Principal Only mortgages were not. These mortgage types contributed to the financial crisis when rates adjusted and borrowers defaulted.
Step-by-step explanation:
The types of mortgages that were offered to 'subprime' borrowers are Interest Only and Option Adjustable-Rate mortgages. Principal Only mortgages were not typically offered to subprime borrowers. During the housing boom leading up to the Great Recession, many lenders provided such mortgage products to individuals with lower credit ratings, featuring initially low payments that could rise significantly over time. The idea was that housing prices would continually increase, allowing borrowers to refinance at better rates before the payments escalated. Unfortunately, when the introductory low payment periods ended and interest rates adjusted to higher levels, many borrowers found themselves unable to afford their mortgage payments, leading to widespread defaults and contributing to the financial crisis.