Monday, February 9, 2009

The next domino to fall

Alt-A loans: New fear for middle-class subprime

The doom-mongers reckon America's property market is on the verge of a new crisis as big as the subprime disaster that began in 2007. The fear is that borrowers with better credit histories, who took out Alt-A mortgages, are defaulting on a similar scale. Rising unemployment in America, where a record 598,000 jobs were lost in January alone, means many borrowers are struggling. Late payments and repossessions are soaring. Dozens of banks are affected because they bought parcels of Alt-A mortgages that were sold as securities and traded around the world. The picture is bleak.

Posted by little professor @ 01:43 PM (895 views)
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3 thoughts on “The next domino to fall

  • little professor says:

    Moody’s reckons total losses from the 2006 Alt-A vintage could peak at 20%, and the 2007 vintage may average 24%. Some have ‘performed similarly to subprime’. Historically, Alt-A losses had been just 1%.

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  • In a recession (and especially in a depression) the number of defaults increases and the recovery decreases… this is where people start to realise that the sh!t they just saw hitting the fan was only the first of a wheelbarrow full of the stuff.

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  • Ctrl-Alt-Del mortgages next to be reset 🙂

    I’ll get my coat

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