Definition of Alt-A:
Alt-A loans are generally considered in a lender’s risk management diversification. Historically these loans have been known for high levels of default and their widespread defaults were a key factor leading to the 2008 financial crisis.
A category of mortgage risk that is classified between sub-prime and prime, but falls closer to prime; also known as A minus..
Alt-A is a classification of mortgages with a risk profile falling between prime and subprime. They can be considered high risk due to provision factors customized by the lender.
How to use Alt-A in a sentence?
- Alt-A loans typically have higher loan-to-value, debt-to-income, and lower down-payments than prime loans, carrying higher risk, and thus higher interest rates.
- The risk of an Alt-A borrower typically falls between prime and subprime.
- Alt-A loans were popular during the Financial Crisis and have seen improvements since then thanks to Dodd-Frank regulation and an improved economy. .
Meaning of Alt-A & Alt-A Definition