1) Subprime loans are loans given to borrowers who do not qualify for prime interest rates due to poor credit histories, with lenders charging higher rates to offset the increased risk. 2) Mortgage-backed securities fueled the growth of the subprime market by allowing lenders to sell mortgages to investors. However, rising default rates caused the value of these securities to drop, damaging investors and the financial institutions that held them. 3) The subprime crisis began in 2007 when falling home prices and rising interest rates caused many subprime borrowers to default on their loans, with the effects rippling through global markets.