Ability To Repay

So, you borrowed money. Can you pay it back? Shockingly, that is the question behind this very difficult-to-understand glossary term. In practice, however, the notion of a rational questioning of one's ability to repay a loan actually became a thing during the 2008-2009 subprime mortgage crisis. Suddenly, janitors married to schoolteachers, with a combined income of $100,000, were getting loans for homes in excess of a million dollars. Had a rational player reviewed their ability to repay those loans, they never would have been made in the first place.