According to the following post, 50% of Alt-A loans (alternative A rated loans) which consist of adjustable loans and fixed loans to stated income borrowers (basically, borrower tells lender their income) could be ‘fraudulent.’ His major point is that bond insurers could avoid insuring mortgages and send themback to the original lender if the application was fraudulent (liar loan – stated income was inflated, for example).
His points are very well taken. We have discussed them here many times – that this mortgage mess is far from over. It will cause further economic pain, but this could be good pain – to bring standards back to sensible levels.
By the way, I would like to put out this warning again: it is time to consider (get some good professional advice before acting! – thanks for mentioning this Lee) refinancing if you have a variable rate, interest only, or any kind of resetting mortgage.Keep in mind that you may need 700+ credit and 20% equity to get the best current rates. Go to Bankrate.com for the latest nationwide average rates.
Get it done.
editor addition: Here is a great article/video from 60 Minutes on US mortgage market problems HERE.