Subprime loans are defined as loans with a reported rate spread. The rate spread on a loan is the difference between the Annual Percentage Rate (APR) on the loan and the treasury security yields as of the date of the loan's origination. Rate spreads are only reported by financial institutions if the APR is 3 or more percentage points higher for a first lien loan, or 5 or more percentage points higher for a second lien loan. A rate spread of 3 or more suggests that a loan is of notably higher cost than a typical loan. These loans were originated for the purchase or refinance of an owner-occupied, one-to-four family dwelling, as reported by HMDA (Home Mortgage Disclosure Act).