Alt-A,

Definition of Alt-A:

1. 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.

2. A category of mortgage risk that is classified between sub-prime and prime, but falls closer to prime; also known as A minus..

3. 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?

1. 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.
2. The risk of an Alt-A borrower typically falls between prime and subprime.
3. Alt-A loans were popular during the Financial Crisis and have seen improvements since then thanks to Dodd-Frank regulation and an improved economy. .