Last week, a member commented on my weekly post that he thought the next great crisis, following the current one caused in large measure by subprime mortgages, will come to us via something called Alt-A loans. And, he just may be right!
Alternative to grade-A prime loans..or Alt-A loans..unlike subprime loans, were dished out to folks considered credit worthy.
But, and here’s where the plot thickens, many of these loans, says the New York Times, were given “without verification of income or assets and on tricky terms…”
Watch out for 2009
Watch out because these loans will reset next year.
And, says the Times, “In coming years, if price declines are in line with expectations, Alt-A losses are projected to total about $150 billion.
So, will this crisis soon to be upon us be better or worse than the current crisis caused by subprime mortgages? No one really knows for sure. But brace yourselves for a political and economic rollercoaster ride.
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{ 4 comments… read them below or add one }
Sounds like a great time to buy.
Aloha,
Keahi
I hope the picture for 09 is not as bad as some economists are saying Countrywide froze all its equity line of credit. Letters were sent out last month and its going to create another problem for people who were counting on them as a safety cushion.
Sidney Manzo
Hard to speculate…Everything is just too uncertain and unpredictable.
I share your concern about Alt-A defaults and would also add Option ARMs to the mix. Neither have experienced significant resets. Here is a link that will show you graphically the calendar for the resets as well as the geographic concentration of these loan products-http://blog.metro-real-estate.com/?p=304