Alt-A's: the next shoe to drop??

Are Alt-A's the next shoe to drop? We at the Daily Bear think so... Alt-A mortgages represent over $1 trillion of outstanding mortgages or ~12%. Combine this with the $1.5 trillion sub-prime market and approximately 30% of the market is under stress.


Recent signs point to stress in the Alt-A market. While payments continue to be made, there a strong signs of credit deterioration. According to S&P, Alt-A loans which are 90 or more days delinquent are 2.5 times higher than 2005. This rate has begun to accelerate in 2007, 4% vs 2% 12/06.

Scary ? About 33 percent of adjustable-rate loans in the Alt-A sector were originated with reduced documentation and a combined loan to value (CLTV) ratio of greater than 95 percent last year. (S&P) These are investors with over 700 Fico scores... just a sub-prime problem, think again. Stayed Tuned.........