Alt-A Mortgage Backed Securities Downgraded

By Justin Gardner | Related entries in Banks, Economy, Housing, Money

Remember when I highlighted a 60 Minutes piece back in December that talked about this?

Well, now it’s happening.

From WSJ via Calculated Risk:

Standard & Poor’s Ratings Service on Monday placed its ratings on $552.8 billion worth of U.S. first-lien Alt-A residential mortgage-backed securities issued between 2005 and 2007 on watch for downgrade, saying it sees an increase in losses from the transactions issued in those years.

S&P said it believes continued foreclosures, distressed sales, an increase in carrying costs for properties in inventory and more declines in home sales will further depress prices and lead to higher losses.

And you know what’s next after this? The Option ARMs. And then the commercial real estate market is up to bat.

All told, we’re looking at another trillions more in potential losses.

Yes, trillions.

Get ready for a lot more pain folks. It’s coming.


This entry was posted on Tuesday, March 10th, 2009 and is filed under Banks, Economy, Housing, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Responses to “Alt-A Mortgage Backed Securities Downgraded”

  1. Snoop-Diggity-DANG-Dawg Says:

    …and commercial real estate….and the bond market…

    ka-boom.

  2. kranky kritter Says:

    Highly-rated investment grade bonds are supposed to be low-risk, low-yield investment vehicles that you buy and hold. If you decide to trade them instead, you get what you get: the risk that comes from guessing.

    Wall street found ways to package low risk alongside high risk, and to get ratings firms to go along with ratings that suggested the risk was far greater than circumstances have proven.

    So it’s some consolation if ratings firms are doing their jobs and rating risky debt as risky. But it would be even better if these frauds were found liable.

  3. Donklephant » Blog Archive » What Does A Depression Look Like? Says:

    [...] we’re already very close to this being the worst recession in post-war history, and with some mortgage time bombs about to go off, I’m almost certain that this one will eventually lay claim to that dubious [...]

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