Friday, November 9, 2007

S&P Warns it May Downgrade Securities Backed by Alt-A Mortgages

It looks as if the sub-prime mess is spilling over into the soon to be Alt-A mess. What worries me is the article from Market Watch states that deliquencies for Alt-A mortgages are 9.9%. If memory serves me correctly, the sub-prime delinquency rate is running between 12 - 15%. What is the delinquency rate on prime mortgages?

Standard & Poor's said on Friday that it may cut ratings on 484 classes of residential mortgage securities backed by so-called Alt-A home loans. The influential agency also warned that it could downgrade ratings on 63 classes of net interest margin securities, a type of derivative that's tied to the Alt-A backed securities in question. "These actions reflect a persistent rise in the level of delinquencies among the Alt-A mortgage loans supporting these transactions," S&P said in a statement. Total delinquencies for Alt-A transactions issued during 2005 and 2006 have increased 43.27% to 9.90% since July 2007, the agency noted.

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