WASHINGTON — There is a language of money, complete with its own vocabulary. It’s in your interest to know as much of the terminology as you can, so don’t be too embarrassed to ask what something means.

One participant during a recent online discussion asked me a question that some might dismiss as naive. But it was a question that many people should have asked before they bought their homes. After all, in a recent survey commissioned by bankrate.com, 34 percent of homeowners with mortgages didn’t have a clue as to what type of loan they had.

“There have been many stories in the news about subprime loans,” the reader wrote. “What exactly is a subprime loan? And what exactly is the problem with defaulting on a subprime loan versus a prime loan? Are there signs to watch out for when you are discussing mortgages with a bank or a lender?”

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Trouble is spreading to borrowers with better than subprime records. 

Turmoil in the mortgage market is ensnaring more companies who lend to people with decent credit.

The spread of home lending woes beyond loans to those with weak credit threatens to reduce the availability of loans for some consumers and even threaten the existence of some lenders.

Rising delinquencies and defaults among subprime borrowers — those with blemished credit histories — have resulted in more than two dozen lenders going out of business, moving into bankruptcy protection or putting themselves up for sale.

Now the so-called Alternative-A mortgage sector, which loans to borrowers with better credit than subprime borrowers but not quite prime, is starting to hurt.

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New Century Financial Corp., one of the nation’s largest subprime mortgage lenders, declared bankruptcy on April 2, joining a growing list of subprime lenders struggling to survive amid a rising tide of foreclosures across the nation.

The subprime mortgage industry is a sizeable chunk of the entire industry. Consumer groups, economists, mortgage bankers, politicians and the Federal Reserve Chairman have given their view on what many are calling the crisis of rising foreclosures associated with subprime mortgage lending. And those views vary as to the effect on the housing industry and the economy as a whole.

What is subprime mortgage lending?

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