In 2003, the Alt-A share of the mortgage market was just 2 percent and the subprime share was only 9 percent, according to a report last week from the Government Accountability Office. But by 2006, Alt-A loans represented 16 percent of the market, while subprime encompassed 24 percent, GAO said. "Subprime loans accounted for less than 15 percent of the loans serviced but about two-thirds of the overall increase in the number of mortgages in default and foreclosure from the second quarter of 2005 through the second quarter of 2007," GAO said. A rapid decline in home appreciation beginning in 2005, leaving borrowers with less opportunity to refinance, as well as relaxed underwriting and lower cash down payments were cited among the factors to hamper loan performance.
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