Subprime mortgage woes may be spreading
Losses are creeping up on so-called Alt-A home loans
SAN FRANCISCO (MarketWatch) – Problems in the subprime mortgage business may be spreading to other parts of the home loan market.
Losses are creeping up on so-called Alt-A loans, which are considered less risky than subprime mortgages, but may have lower credit quality than “prime” loans.
That’s sparked concern among investors in companies such as IndyMac Bancorp, Countrywide Financial Corp, and even General Motors.
Subprime mortgages are offered to lower-income borrowers with spotty credit records. The sector has descended into crisis recently as rising interest rates and stagnant home prices have left more borrowers struggling to meet monthly payments.
Subprime Defaults Are `Beginning of Wave,’ Bies Says (Update5)
By Alison Vekshin and Anthony Massucci
March 9 (Bloomberg) — The nation’s banks are just beginning to feel the pain of defaults on risky mortgages they made at low introductory rates when housing prices were soaring, U.S. Federal Reserve Governor Susan Bies said.
