[JackFr]

> And neither Equity, or ability to repay (debt/income ratio) has anything to do with subprime lending or a subprime lending crisis.

No, that is exactly what it means.

> Subprime generally means enticing debtors with interest rates below prime, with a loan that will adjust to above prime (and many times even into a single balloon payment at the end which statistically almost no American can make). No one should qualify for such loans on the basis "you may be able to refinance again at the end to avoid the balloon payment", if you don't have the cash on hand to pay the balloon payment, you shouldn't qualify for these types of loans.

No, those are teasers with a low-fixed rate for 2,3 or 5 year, with the rate resetting to a very high adjustable rate after the teaser period. Teasers technically are 30 year amortizing mortgages, but you are correct in that they should be treated like balloons, because the payment after the reset is higher than the borrower can typically make.

In an environment of rising home prices, it should be easy to refi on similar terms at the end of the teaser period, but if prices are not rising, you can see what happened in 2008.

[throwaway_law]

>No, those are teasers with a low-fixed rate for 2,3 or 5 year,

Not "teasers" but ARMS, and 90%+ of subprime loans were ARMs leading to the mortgage crisis.