The happening of complicated mortgage crisis turned into the global financial crisis. Therefore, we need to have clear knowledge of the structure of mortgage loans for the purpose of not taking this kind of mistake again. This experience is not only useful for the government but also helpful for the investors. The estate bubble in the USA had its root to the simple mechanism of subprime mortgage lending

At first, the prime mortgage lending is that loans for the purchase of invariable assets with the high quality. It is carefully decided by a credit officer and the loans have to be ensured with the borrowers’ documents proving the ability of paying the debt. The yearly income, the career history, the borrowing files and debts are included in the submitted documents.

On the contrary, the subprime mortgage loans are made with a low interest but at a high risk. The kind of loans are not inquired thoroughly and of little insurance. There are also documents showing the borrowers’ financial situation.

Traditionally, one borrower must apply for the capital borrowing at the banks. The document needs carefully viewed by the credit officer. The borrower must submit the other documents involved with their ability to pay all the interest of the loan. Most of the clients choose the loans at a fixed interest rate for the safe reason.

However, as the demand for the residence home in the USA rose since the beginning of the 21^st century hotly increasing, the number of documents for a loan is reduced to the minimum. Many loans were made without any documents. The individual credit point would decide the form of the mortgage loans. To make up for the high risks, the interest of the ARM mortgage loans was gradually raised to the higher level. This led to the insolvency situation in the USA later.

In most cases, the original lender remains the creditor throughout the lifetime of the mortgage. However, it is sometimes the case that financial institutions sell on mortgages which customers have taken out with them to other financial institutions. After the sale, the buyer becomes the new creditor and any payments still due on the mortgage will go to it. In most cases, the mortgagor will be completely unaware that this transfer of ownership has taken place and will continue to make payments to the original financial institution as before. Those payments will then be forwarded to the new mortgage creditor.