Buzzword: Piggyback
Life is hard enough without having to decipher everything. Each week, Marketplace Money brings you a word or a phrase that has bubbled to the top of the news. For instance, "Piggyback." You hear it, you see it, but do you really know it?
More on Investing
A heavy financial load brings us this week's Marketplace Money buzzword: Piggyback.
A piggyback is a type of mortgage loan. It's used by homebuyers who can't afford the downpayment on a house. Instead of taking out just one mortgage, they piggyback a second one on top of it.
People with good credit can shoulder a piggyback, but some borrowers with bad credit . . . can't. Lots of them are defaulting on piggybacks they probably shouldn't have been offered at all. This week, Fremont General, a big lender to risky borrowers, stopped offering piggybacks. All those defaults kept the company from bringing home the bacon.
