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In worse-off states, Alt-A is becoming the new subprime

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[Update 1: corrects the percentage of Alt-A loans that went from current to delinquent in six months] Data released Tuesday by 1010data, in conjunction with the American Securitization Forum, CoreLogic (CLGX) and Equifax (EFX), confirmed what CoreLogic economist Mark Fleming mentioned during an interview with HousingWire one month ago -- Alt-A loans are the new subprime. However, Alt-A mortgages passing 25% delinquency rates, levels similar to subprime loans, remain localized to only a few states. The Market Review of Non-Agency MBS is the first in a series to be released by 1010data and the American Securitization Forum, which recently entered into a partnership. This report uses data collected through September and focuses on trends within the Alt-A category between 2004 and 2008, as well as jumbo and option ARMs. Jonah Green, head of mortgage analytics at 1010data and contributor to the report, said the delinquency trends with Alt-A loans directly reflect a subprime attitude, or perhaps even worse. "Alt-A is traditionally considered near prime collateral," Green told HousingWire. "But because of the housing crisis, the delinquencies you're seeing are so great that people are considering Alt-A, effectively, subprime." According Green, 9% of Alt-A loans that were current six months ago are now delinquent. Approximately 40% of Alt-A loans originated in Nevada between 2004 and 2008 are more than 60-days delinquent or in foreclosure. Nevada is topped only by Florida, which has a reported 46.4% of issued Alt-A loans 60-days or more delinquent or in foreclosure. Twenty states have Alt-A delinquencies exceeding 25% (see map). Green said that state delinquencies north of 25% are high, even for a subprime deal. Not only that, but Green said jumbo loans could be next to follow suit. In Nevada, 24.4% of jumbo loans are 60-plus days delinquent or in foreclosure, followed by 20% in Florida. "Jumbo prime is performing like subprime, Alt-A is performing worse than subprime and subprime simply isn't performing," Green said. "The private label deals weren't structured with types of delinquencies in mind." Write to Christine Ricciardi.

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