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Wednesday, December 17, 2008

Alt-A Loans - Is this the Next Big Fear for 2009?

For future reference ... note the chart - http://seekingalpha.com/article/110919-alt-a-loans-spiraling-downward



Note that the size of the Alt-A Resets are about the same rough order of magnitude as the Sub-Primes, except they are deferred by nearly a couple of years, based on a cursory glance of the above chart.

With the Fed Funds Rate dropped to nearly zero now, will the Feds have enough Balance Sheet to even absorb half of these future Alt-A problems?

2 comments:

Seng said...

Just a quick thought - with the Feds Fund Rate at 0 to 0.25%, these mortgage resets would most likely result in LOWER mortgage payments, which is probably what the Feds intended. Had they not lowered the rate, it is quite possible that we would have another sub-prime crisis when these mortgages reset.

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