April 12, 2007

IMF: Subprime decline more rapid than expected. HP: Brace for Alt-A crash landing

OK, everyone, BRACE! Assume the crash position. Put your head between to your knees... The Alt-A meltdown is gonna surprise some folks, and may end up being a bigger story (and impact) than the Subprime Disaster.

You ready? We're coming in for a landing!

IMF warns subprime woes may spread, dollar falls

NEW YORK (Reuters) - Fallout in the U.S. subprime mortgage market could spread to related markets, the International Monetary Fund warned on Tuesday, as nagging worries about housing helped weaken the dollar.

The company's shares fell on investor concern that problems in subprime mortgages may be spreading to higher-quality housing loans, a view the IMF also gave credence to.

The IMF said in its semi-annual Global Financial Stability Report that a decline in the subprime market was more rapid than expected at this point in the overall housing downturn.

Looser underwriting standards may have gone beyond the subprime sector into portions of "Alt-A" mortgages, the next-riskiest area, the IMF said. In addition, there could be losses in other consumer credit markets, including credit card and subprime auto loan asset-backed securities, it said.

"Financial supervisors need to identify the potential for spillovers from the cooling of the housing market and continue ensuring that mortgage underwriting standards are maintained," the IMF said.


BuckNekid and Mabel Wonderful said...

Cash is king!

Anonymous said...

Alt-A is the 2 ton elephant in the room that is now being ignored. The 800 pound gorilla of Sub-prime is getting all the attention and is being downplayed and spin as "low credit scores" caused it. Many sub-primers in trouble has scores decent enough to get better loans but were steered to sub-prime. The issue is "ability to pay" not FICO. They are all saying Alt-A borrowers have better FICOs so they are ok. The "ability to pay" in Alt-A is unknown because liar loans are a huge component of Alt-A. The better FICOs might just mean the borrowers are smart enough to just let go & walk away from the loan. Thus Alt-A because its a larger segment, has the real potential of being much worse than sub-prime. Unfortunately the only way to tell is let time move forward and we will see how events unfold.

Don_Imus said...

Any article that starts "Assume the position" is a must read.

boombop said...

Can anyone here suggest some publicly traded alt-a lenders on the brink of implosion.

Anonymous said...

The federal gubermint is going to subsidize people's mortgage payments. No more foreclosures, no more subprime issues.

And no I'm not being sarcastic unfortunately.

Anonymous said...

Can anyone here suggest some publicly traded alt-a lenders on the brink of implosion?

Kenduffelsniffenspotzen said...

Wow. I saw that coming a mile away. The only question is what do we call the economic hole that we are falling into? Will it be the "Second Great Depression?". Or the "Great Recession"? Or something else altogether?

Anonymous said...

"Suggest some publicly traded alt-a lenders on the brink of implosion."

Boombop - Check the implode-o-meter link on the HP blog roll.

Anonymous said...

Here comes Seattle's turn, total Alt-A ville. Top 10 in the nation.

signed: HaHaHa

Anonymous said...

Primes next. If you think that Alt-A borrowers will be smart enough to walk, I'm thinking there could be plenty of no-money down Prime borrowers who may be getting a little sick of their 500- 2 million dollar loans.

Who the hell invented the no-skin-in the-game loan?

Got 20-50% Down?