Final answer:
The subprime mortgage market is associated with higher-risk borrowers, including those with lower credit ratings and past delinquency. Relaxed lending standards and the securitization of loans contributed to the proliferation of risky subprime loans, greatly influencing the 2008 financial crisis.
Step-by-step explanation:
The segment of the mortgage market that involves higher-risk borrowers, including those with marginal credit scores and issues with delinquency, is commonly referred to as the subprime mortgage market. In the lead-up to the financial crisis of 2008, the proliferation of subprime loans became widespread.
During the 1990s and early 2000s, changes in finance and banking laws allowed lending institutions to securitize their mortgage loans, contributing to increased risks as the ability to repay became less of a concern compared to the profitability of selling the loans as bonds. These practices included issuing loans without proper vetting of borrowers’ income, job stability, or assets, popularly known as NINJA loans. As a result, when the housing bubble burst, it triggered a financial crisis due to the collapse in value of the mortgage-backed securities tied to subprime loans.