Prime (ordinary) loan/mortgage—this is the standard type loan usually presented by lenders and brokers to any borrower with the usual standards of probity and security with a standard market interest rate, known on the market as Alt-A bonds and rated as AAA by the credit rating agencies.
Subprime (sub ordinary) loan/mortgage—this is the dodgy loan because of the lack of probity and security thus bearing a higher risk to the lender and attracting a higher (crippling) interest rate, known on the markets as Alt-B, Alt-C or even Alt-D such as the NINJA mortgages (see below for explanation). It was these that were mis-rated as AAA and should have been rated from C to D by the corrupt credit rating agencies. These are the papers being held by many financial institutions and are now considered worthless. “The US Government to buy distressed mortgages at deep discounts from banks and other institutions.” With this announcement on Friday Sept. 2008 Bush et al declared the Fed (taxpayers) was going to buy up these toxic worthless papers and recycle them as toilet paper.
