Typically it means someone has an advantage over the other (usually an information advantage) that they use to extract a more favorable outcome for themselves than they would have gotten in a fair market.

In the mortgage market specifically they are loans that are initiated by someone who is planning to offload them ASAP and doesn't care if the borrower has any capability to pay. They may outright lie to the borrower about the situation in order to close the deal. Then they lie to the investors about the quality of the loan in order to offload them as quickly as possible for a large profit.