Decay is spreading to the upper floors of America’s mortgage market

“Alt-A” mortgages, offered to borrowers sandwiched between subprime and prime.

This market was trumpeted as a means of extending home ownership to those, such as the self-employed, with a reasonable credit standing but unsteady income. Its practitioners specialised in loans with scant documentation and exotica such as negative-amortisation mortgages, which allow borrowers to pay less than the accrued interest, with the difference added to the loan balance.

That Alt-A has troubles comes as no surprise.

Go no to: Economist.com to read the full article