'1. "High LTV (loan-to-value)" meaning that homeowners had borrowed a significant amount of their property, say 95% of its value to make the purchase.
'2. "Prime Rate" is an interest rate benchmark, interest charged to creditworthy customers
'3. "Subprime rate" is a worse interest rate than prime rate. Subprime Mortgages includes "teaser rate", it's low rate for fixed period at start, then it will switch to "adjustable rate" after the fixed period passes.
'4. "Adjustable rate" means that the mortgages themselves see their interest rates changes depending on whatever the market interest rates are. Some loans have a fixed period where they keep what's called a "teaser rate", there is a point after which will regularly adjust by market.
'5. "Credit Default Swap (CDS)" like an insurance contract, have to do regular premium payments, in order to keep this contract active.
'6. "Mortgage-backed Security" is type of bond and backed with pool of mortgages. Assign credit rate for each MBS bonds.
'7. "Tranches" - The pool of MBS bonds is split into tranches based on risk levels. Assign credit rate for each tranches.
'8. The "Pass-through" method is one of the simplest and earliest forms of MBS structures.
'9. "Collateralized Debt Obligation (CDO)" is like pool of tranches from multiple pool of MBS bonds.
'10. "Carry" is refers to the return you earn by holding something.
'11. "ISDA" stands for International Swaps and Derivatives Association and it's an agreement is a set of terms between two parties that will let them buy and sell "over-the-counter" derivatives with one another directly. "Over-the-Counter" is meaning securities not listed on exchanges.