Friday, August 03, 2007

First "Sub-Prime," Now "Alt-A"

In the home mortgage market, "sub-prime" loans were the first to blow up, leading to some major problems for Bear, Stearns (and others, like American Home Mortgage, which closed its doors yesterday.)

Now the "Alt-A" loans are on the block, too. "Alt-A" loans are 'pretty good' stuff; not "prime," but better than "sub-prime." "Alt-A" is as much as 20% of originations in 2006.

... Wachovia, the seventh largest home lender, discontinued making Alt A mortgages through brokers because ``it's becoming more difficult to sell these mortgages in the secondary market as the financial markets continue to tighten,'' spokeswoman Christy Phillips-Brown said.

... SunTrust Banks Inc., the 14th largest home lender, has ``pretty much gotten out of Alt A'' for now, said Sterling Edmunds, who heads its mortgage unit.

It's RUMORED that Washington Mutual is also getting out of "Alt-A."

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