The correct answer is D.

Subprime mortgage lending refers to the practice of lending to borrowers who are considered a higher credit risk, often due to a lower credit rating, as in Ann's case. During the housing boom in the years leading up to the 2008/2009 financial crisis, there was a significant increase in subprime lending, which eventually contributed to the severity of the crisis.

Option A is incorrect. "Unsecured mortgage lending" is not a recognized term in the context of mortgage lending. Mortgages are by definition, secured loans, with the purchased property serving as collateral.

Option B is incorrect. "Transactional lending" refers more broadly to any lending activity where a lender provides a loan to a borrower for a specific purpose. It doesn't specifically refer to the risk associated with the borrower.

Option C is incorrect. "Premium mortgage lending" suggests that the loans are offered to high-quality or 'prime' borrowers, which is the opposite of Ann's situation.

Things to Remember

• Subprime mortgage lending refers to the practice of offering loans to borrowers who have low credit scores and a high risk of defaulting on their payments.
• These loans often come with higher interest rates than prime loans to compensate for the increased risk of default. Subprime loans frequently feature adjustable-rate mortgages (ARMs), where the initial interest rate is typically low, but it can increase significantly after a certain period.
• The subprime lending market played a major role in the 2008 financial crisis. An abundance of these risky loans, bundled into securities and sold off to investors, led to widespread defaults.