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American Home Lays Off Hundreds; What's Really Going on in Alt-A?

From Newsday, news of quiet trouble at American Home:
American Home Mortgage Investment Corp. ... has laid off hundreds of workers without notice or even time to clear out their desks, current and former employees said this month. ... as things turned south for many housing-related businesses, American Home has offered what one analyst called "overly rosy" earnings predictions ... ... several current and former employees, speaking on condition of anonymity for fear of reprisal, said there was a total of about 200 layoffs.
With AHM primarily an Alt-A mortgage operation, the natural question here is where the Alt-A market is ultimately headed. The AP weighed in earlier today on the issue:
Rating agencies are likely to review bonds backed alt-A mortgages in the near future, said Scott Valentin, managing director of specialty finance research at Friedman, Billings, Ramsey & Co. "It probably will not be as bad as subprime, but there will likely be downgrades" among alt-A-backed mortgage securities, Valentin said.
Valentin certainly doesn't sound too confident, and I can't blame him. The future of Alt-A was also on the mind of Mathew Padilla at the Mortgage Insider blog today, who pointed to an S&P report I wrote about late last month:
The percentage of Alt-A loans that are 90 or more days delinquent (including loans that were foreclosed and represent real estate-owned assets, are in foreclosure, or are in bankruptcy) for the 2006 vintage is 2.5 times higher than the previous year's figure and more than 4 times that of the 2004 deals with the same amount of seasoning ...
It's tough to be confident when Alt-A defaults are reaching what S&P is already calling "disconcerting" levels -- remember what I said earlier: it's all about the underlying collateral.

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