11 Apr 2007 08:15 am
Subprime loans – alive and well
Sponsored Links
| Losses in loans made to the riskiest borrowers have raised fears that lenders would cease making many of the [tag]exotic loans[/tag] that have become popular over the past few years. Nearly 40 percent of all loans made in 2006 fell into the [tag]subprime[/tag] or [tag]Alt-A category[/tag]. Like most mortgages, Alt-A loans are sold by lenders to Wall Street investments banks, which package those loans into bonds called mortgage-backed securities. Mortgage-backed bonds are then sold to investors. Bonds based on he Alt-A loans are potentially riskier because in many cases borrowers do not prove their income, or have very little invested in their house. |  |