Answer to Question #69500 in Macroeconomics for nick

Question

According to the Application, the reason why the problem caused by subprime loans came to light was because

Answer 1

A proximate cause was the rise in subprime lending. The percentage of lower-quality subprime mortgages originated during a given year rose from the historical 8% or lower range to approximately 20% from 2004 to 2006, with much higher ratios in some parts of the U.S. A high percentage of these subprime mortgages, over 90% in 2006 for example, were adjustable-rate mortgages. These two changes were part of a broader trend of lowered lending standards and higher-risk mortgage products.
Reference:
https://en.m.wikipedia.org/wiki/Subprime_mortgage_crisis