According to Investopedia - A subprime mortgage is a type of loan granted to individuals with poor credit histories (often below 600), who, as a result of their deficient credit ratings, would not be able to qualify for conventional mortgages. Because subprime borrowers present a higher risk for lenders, subprime mortgages charge interest rates above the prime lending rate
What is prime lending rate? Interest rate charged by banks to their largest, most secure and creditworthy customers on short-term loans.
So how did the subprime mortgage crisis begin? Most of the blame lies on the lenders who were willing to lend out these loans to people with high risk of default.
The next blame lies on the shoulders of the buyers, who bought the houses they could not afford at the interest rates they could not afford to pay by taking loans they should not have taken in the first place.
Then came the investment bankers and hedge funds who lent a hand in this whole mess by creation of CDO using these mortgages as assets and hedging them and increasing volatility in the market and fueling investor losses.
This is a small explanation of the subprime mortgage crisis which gripped United States and was responsible for the closure of many high profile banks and industries and also responsible for the loss of thousands of jobs.

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Source : Freedom Debt Relief Review