by Calculated Risk on 5/13/2007 11:11:00 AM

From the O.C. Register: Lending's next tsunami?

... Indymac and others who deal in Alt-A loans, such as Impac Mortgage Holdings of Irvine and Downey Financial of Newport Beach, may not have time to wait. The same problems shaking up the subprime market are now emerging in the Alt-A industry.

What's more, a Register analysis shows reserves for loan losses by these companies are not keeping pace with delinquent loans.
...
[Manuel Ramirez, an analyst with Keefe Bruyette & Woods] said it's "eerie" how the subprime correction appears to be repeating in Alt-A.

"Compared to subprime it's at a snail's pace but I think it's real," Ramirez said.

Data on homeowners missing their monthly payments seem to fit his assessment.

Alt-A delinquencies hit 2.90 percent in February, more than double 1.23 percent a year ago, according to First American LoanPerformance, which tracks loans sold to investors as securities. Yet while that's much greater than 0.47 percent for prime loans, it's far from the 14.79 percent for subprime.

Analysts say delinquencies are rising in the Alt-A sector for the same reasons as subprime: too many loans made with little or no down payments combined with little or no proof of income.