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Definition of ALT-A
What does ALT-A mean?
- [US, finance] Alternative-A — Describing mortgages loans that do not conform to the traditional standards of Fannie Mae, but are presented as having an "A" credit rating, based on the borrower's FICO credit score.
Alt-A: An Alt-A mortgage, short for Alternative A-paper, is a type of U.S. mortgage that, for various reasons, is considered riskier than A-paper, or "prime", and less risky than "subprime," the riskiest category. For these reasons, as well as in some cases their size, Alt-A loans are not eligible for purchase by Fannie Mae or Freddie Mac. Alt-A interest rates, which are determined by credit risk, therefore tend to be between those of prime and subprime home loans, although there is no single accepted definition of Alt-A. Typically Alt-A mortgages are characterized by borrowers with less than full documentation, lower credit scores, higher loan-to-values, and more investment properties. A-minus is related to Alt-A, with some lenders categorizing them the same, but A-minus is traditionally defined as mortgage borrowers with a FICO score of below 680 while Alt-A is traditionally defined as loans lacking full documentation. Alt-A mortgages may have excellent credit but may not meet underwriting criteria for other reasons. During the past decade, a significant amount of Alt-A mortgages resulted from refinancings, rather than property purchases.
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More Mortgage Meltdown (2009)
6 Ways to Profit in These Bad Times by Whitney Tilson, Glenn Tongue
Alt-A is a catchall category for loans that are typically better than sub- prime but aren't considered prime, most commonly due to: Incomplete documentation ( stated income, stated assets, low documentation, or no documentation) (73 percent of ...
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Video shows what Alt-A means. Alternative-A , Describing mortgages loans that do not conform to the traditional standards of Fannie Mae, but are presented as ...
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