Alt-A

An Alt-A mortgage, short for Alternative A-paper, is a type of U.S. mortgage that, for various reasons, is considered riskier than A-paper, or "prime", and less risky than "subprime," the riskiest category. Alt-A interest rates, which are determined by credit risk, therefore tend to be between those of prime and subprime home loans. Typically Alt-A mortgages are characterized by borrowers with less than full documentation, lower credit scores, higher loan-to-values, and more investment properties. A-minus is related to Alt-A, with some lenders categorizing them the same, but A-minus is traditionally defined as mortgage borrowers with a FICO score of below 680 while Alt-A is traditionally defined as loans lacking full documentation. Alt-A mortgages may have excellent credit but may not meet underwriting criteria for other reasons.

Alt-A loans should be not be confused with alternative documentation loans, which are typically considered to have the same risk as full documentation loans despite the use of different documents to verify the relevant information.

Read more about Alt-A:  Characteristics of Alt-A, Borrower Considerations, Property and Occupancy Considerations, Revaluation of Risk

Other related articles:

Alt-A - Revaluation of Risk
... See also Subprime mortgage crisis During the subprime mortgage crisis that began in 2007, Alt-A mortgages came under particular scrutiny ... One problem associated with Alt-A loans is the lack of necessary proof or documentation needed to be approved for a loan ... Because Alt-A loans are also the financing of choice for most non-owner occupied, investment properties, as a class they represent a far greater likelihood of borrower default than ...