Final answer:
Subprime mortgage loans are high-risk loans given to individuals with poor credit scores, featuring higher interest rates to offset the potential for default.
Step-by-step explanation:
Subprime mortgage loans are typically extended to borrowers with lower credit ratings, reflecting a higher risk for lenders. These loans feature higher interest rates compared to standard market rates to compensate for the increased likelihood of default.
Contrary to conventional mortgages, subprime loans may have features like low or no down-payments and low initial payments, which eventually transition to much higher rates, increasing the financial burden on the borrower. This practice came into the spotlight during the financial crisis of the mid-2000s when a significant number of subprime borrowers defaulted on their loans, playing a part in the economic downturn known as the Great Recession.
Subprime mortgage loans are made to borrowers with low credit scores, which is option A. These loans feature higher interest rates than conventional mortgages to compensate for the increased risk of default. The banks that offer these loans can sell them as bonds to separate their financial interests from the borrower's ability to repay, making highly risky loans more attractive to lenders.