the majority of mortgages are not subprime or Alt-A. most are credit worthy and fully backed by Fannie or Freddie. most subprime loans are held by the originator or speculative investors. sure they run a higher risk of default but they also charge higher mortgage rates. plus, some subprime or Alt-A lenders can require the borrower to also get private mortgage insurance, which ends up in their higher mortgage rate. it is doubtful that the bulge bracket firms would load up on subprime mortgage assets. even if they had subprime positions, they still get the property when the mortgage holder declares foreclosure. New Century and all those smaller shops specializing in subprime cant take the foreclosures cuz they probably dont have the cash liquidity to weather the storm.
The majority of loans in existence are not Alt-A, you are correct. But 2005 and 2006 equated to something like 40% and 45% Alt-A loans in the marketplace. When you consider the ridiculous prices and buying that went on in those two years and that other than early/mid 2005, prices have mostly declined or flattened, most of those loans are probably still out there. Countrywide alone wrote about $600 billion, supposedly a bit more, in Alt-A last year.
i strongly doubt that Alt-A loans made up 40-45% of all mortgages. even if they did, the gross dollar amount would represent a much smaller percentage because lenders arent going to lend out huge mortgages to weak borrowers. i know for a fact that countrywide's portfolio is mostly conforming loans. sure they might take a hit but they will not get raped like NEW.
check out MTB maybe this is related http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMk6nAu9pGoI
Okay, keep believing in unicorns too silly idiot. Glad you just "strongly doubt" rather than actually research. I hope you "win" a lot of money that way.
i worked in mortgage banking several years ago and saw what countrywide's portfolio was at that time. alt-a loans were NOT 45% of their portfolio or anywhere near it. why dont you show your proof that Alt-A loans make up 45% of all mortgages in 2005/2006? please prove me wrong. or maybe u are the silly idiot.
I bet combining Subprime and Alt-A, you have an estimate close to that number..... it's been reported that Subprime was over 20% of all mortgages