Alt-A

She said defaults in alt-A mortgages may spike higher since they became popular relatively late in the mortgage boom.

Alt-A mortgages include loans made with less than full documentation of borrowers' income or assets.

Consider securities backed by Alt-A mortgages, which were issued to borrowers with little or no documentation of their income.

Moody's, which last summer had issued a sanguine outlook for Alt-A, recently quadrupled its loss projections on bonds backed by such loans.

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Banks have already sold a sizeable chunk of their Alt-A holdings to hedge funds and other asset-management firms, often at large discounts.

Finally, the value of subprime and Alt-A mortgage bonds has soared in secondary markets this year, assuaging investor anger.

Borrowers of Alt-A loans have slightly better credit histories than subprime borrowers.

The other resetting loans include "jumbo" mortgages of more than $417, 000 and Alt-A loans, a category between prime and subprime.

It now expects losses for 2006-07 Alt-A securitisations to top 20%, compared with an historical average of well under 1%.

ING, a Dutch bank, still has EUR27. 7 billion ($35. 1 billion) of Alt-A debt.

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