Question

Should sub prime loans be subject to regulations. Why or why not?

Answer 1

Yes sub prime loans should be subjected to regulations. The failure of writing and non repayment of sub prime loans was the main reason of crisis 2007.

So banks were giving put these sub prime loans with less documentations and less borrower check, whether will he be able to repay his loan or not. This was majorly overlooked and thus a person was having 2 3 loans on average in his name and when house market bubble burst in 2007.in US, people weren't able to repay back their sub prime loans and neither the mortgages backed to these loans were able to be sold resulting in worldwide crisis. So a lesson from history that regulation should be put on sub prime loan and if they are increasing with short period then an alert should be raised.