Money seems tricky. The rules of the game are not widely understood. That's why companies can create products to fill the gaps in human intelligence. We all like the idea of someone else doing the hard stuff, someone else doing our dirty work.

Typically, subprime loans are for persons with blemished or limited credit histories. The loans carry a higher rate of interest than prime loans to compensate for increased credit risk.

I have always said that it is very deceiving to say that the mortgage crisis is all about subprime loans. During the housing bubble, prime borrowers got just as greedy as subprime buyers and got themselves in loans they didn’t understand and/or couldn’t afford.

Contrary to what the press is saying, U.S. housing prices are not falling due to subprime loans. This article will shock you and is critically important if you own real estate going into 2008.