"Subprime" is Word of the Year for 2007

'Subprime' is word of year 2007
"Subprime" has been voted word of the year for 2007 by linguists of the American Dialect Society.

Used to describe a risky loan, the word burst out of the banking sector as the home loan crisis in the US turned into a global credit squeeze.

It beat competition from Facebook, water-boarding and Googleganger.

The society says it just charts words or phrases that have become prominent in a particular year, and is not telling people how to speak.

"Subprime" means literally "less than ideal" and is the technical term used to describe loans - especially mortgages - made to borrowers with poor credit histories.

A series of defaults on such loans spread panic through much of the banking sector in 2007 as financial institutions realised they had bought many of these loans from one another without knowing how risky they were.

Creativity

American Dialect Society spokesman Wayne Glowka said: "When you have investment companies losing billions of dollars over something like bundled subprime loans, then you have to consider whether it's important.

"You probably also want to think about paying off that third mortgage."

Other words nominated for the award included "water-boarding" - a form of interrogation involving simulated drowning, that was much discussed in recent confirmation hearings - and "Facebook", a popular social networking website.

The society gave its "most creative word" award to "Googleganger" - meaning a person thrown up by a Google search on your name, but who is not you.

Among other citations this year:

* Ninja - a poorly documented loan made to a high-risk borrower - someone with No Income, No Job or Assets
* Wrap rage - anger brought on by the inability to open a factory-sealed package
* Tapafication - the tendency of restaurants to serve food in many small portions, like tapas.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/world/americas/7173110.stm

Video - Home Equity Loan Officer Will Dance for Biz!

When a Home Equity Loan is Good

Published December 3, 2007
[ From Lansing State Journal ]
Fearing a layoff? Prepare finances for jolt

John Waggoner
Gannett News Service

You can't help but notice the little signs at work that layoffs are coming. The closed-door meetings. The buzzards in your parking space.

The economy is slowing, and that means you need to be prepared. You need to make sure that your household can withstand the loss of income.

• Your first step: Make a rainy-day fund. Financial planners often recommend that you keep three to six months' worth of salary as an emergency fund. They're talking about the amount of money you need to pay your bills each month.
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Keep the cash in a money-market mutual fund or a bank money-market account. The average money fund yields just 4.2 percent, but you're not investing for the yield. You want access to your money whenever you need it.

• You also will need to reduce your expenses. Pay down your debts aggressively. Think of your debts as good debts and bad debts. Good debt is your mortgage, or any other loan that charges less than 6 percent in interest.

Bad debt is pretty much anything that charges more than 6 percent. A credit card balance that charges 18 percent interest? Bad debt.

• Consider taking out a home equity loan to get rid of your high-interest loans, if you don't have enough in savings to pay off the debt.

The catch: It's a lot easier to get a loan when you have a job. If you suspect you're going to be laid off, run to the loan office.

If you don't have a home equity loan available, cut up the card and stop making new charges on the account. Pay 5 percent of your balance this month. Pay the same amount each succeeding month.

• It could make sense to stop pouring money into your 401(k) plan and using it to pay down high-interest rate debt, said Kurt Brouwer, a Tiburon, Calif., financial planner. If your company matches your contribution, however, you should contribute at least enough to get the match.
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