Final answer:
A nontraditional mortgage, as defined by the SAFE Act, refers to a subprime loan with features like low or zero down-payment, little income verification, and low initial payments that later increase.
These loans were made in the mid-2000s to borrowers without income, job, or assets, and were highly risky. The SAFE Act was implemented to address the issues caused by nontraditional mortgages.
Step-by-step explanation:
The SAFE Act defines a nontraditional mortgage as a type of loan that has characteristics like low or zero down-payment, little scrutiny of whether the borrower has a reliable income, and sometimes low payments for the first year or two that will be followed by much higher payments.
This type of loan is also known as a subprime loan. Subprime loans were made by financial institutions in the mid-2000s and were often given to borrowers who had demonstrated no income, no job, or no assets. These loans were highly risky and contributed to the economic crisis.