From CNN/Money:
‘Liar loans’: Mortgage woes beyond subprime
By Chris Isidore
Subprime mortgages have been generating a lot of attention, and worry, among investors, economists and regulators, but those loans may be only part of the threat posed to the housing market by risky lending.
Some experts in the field are now concerned about the so-called Alt. A mortgage loan market, which has grown even faster than the market for subprime mortgage loans to borrowers with less than top credit.
Alt. A refers to people with better credit scores (A-rated) who borrow with little or no verification of income, or so-called alternative documentation.
But some people in the industry call them “stated income” loans, or worse, “liar loans.” And they were an important part of the record real estate boom of 2004 and 2005 that has recently shown signs of turning into a bust.
Standard & Poor’s estimates that the Alt. A market has gone from less than $20 billion in loans in the fourth quarter of 2003 to more than $100 billion in each of the last three quarters. Overall, new Alt. A loans totaled $386 billion in 2006, according S&P’s estimates – up 28 percent from 2005.