Reply #4: Alt-A are otherwise known as "liar loans"

[notesdev]

They're the notch above subprime, and just barely less risky. They're known as "liar loans" because, except in rare cases, the borrower could name any income figure necessary to be qualified for the loan, and nobody would actually check to see if they were telling the truth.

Anyway, the Alt-A problem is going to be bigger than the subprime; not only are there slightly more of them, but the Alt-A group has taken a valuation hit that the subprime hadn't before the collapse of the latter group.

Here's some good reading on the subject:
http://globaleconomicanalysis.blogspot.com/2007/07/alt-word.html

I really like that author; you can go back years and see that he was spot on in noting problems that the mainstream financial world ignored, and he's good at explaining complex economic concepts in layman's terms.