Alt-A Loans: The Crisis Yet To Come?

May 20th, 2008

Last week, James Connery 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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This Post is from the BiggerPockets Real Estate Blog. Copyright © 2008 BiggerPockets, Inc. All Rights Reserved.

Alt-A Loans: The Crisis Yet To Come?

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