Economy, Alt-A resets could be a knockout punch

We cannot blame the credit crisis on poor people any longer, as if anyone actually believed that anyway. Rating agency Moody’s said last month that it was revising upwards the expected losses on 90% of Alt-A mortgage securities. It describes the collapse as ‘unprecedented for its asset class’. These are not the subprime households who would probably have been better off without a mortgage in the first place. Alt-A borrowers tend to be middle-income earners.

The first Alt-A resets begin later this year. Other factors, such as a slow economy, could impact Alt-A borrowers well before their resets hit. You can watch an interesting interview from “60 Minutes” to form your own opinion:


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