Mr. Mortgage says,
The ‘Alt-A Implosion’ could dwarf the Subprime Implosion when all is said and done. This is because values in higher-priced, heavy Alt-A areas should actually end up being hit harder, as Alt-A loan allowed much more leveraged and much less documentation than Subprime relying mostly on a credit score and an appraisal for loan approval. Within the Alt-A universe is where all of your stated income, no ratio, no doc, 100% piggy-backs can be found. The most notorious Alt-A loan is the Pay Option ARM. The way all of these loans were structured is producing a very linear mortgage crisis - from Subprime to Alt-A to Jumbo-Prime then Prime. The coming Alt-A and Jumbo Prime Implosions puts at risk well over $1 trillion in residential mortgage loans, much of it sitting on the balance sheets of some of the nations largest banks such as Wells Fargo, Chase, Bank of America and Citi. It will also take out of commission the higher income demographic for a long period of time. More
Tags: $1 Trillion, Alt-A, Bank of America, Chase, Citi, Implosions, Jumbo Prime, Pay Option ARM, subprime, Wells Fargo
