Roger Miller (see) released a song called “When a house is not a home”, and it is was recently re-released by talented musician Bobby Flores on his CD called “Too Many Rivers.” What is my point?

In 2006 about $3 trillion (USD) represented the sum total of all United States mortgages. Of that total, about 20 percent were ‘Alt-A’ loans for second homes, vacation homes, and similar. Were these houses actually homes for grandmas across the nation? Default on grandma’s home is a lot different than default on a flip, fixer-upper, or rental house. My point is that the house is not your primary home. These are not automatically subprime mortgages by definition.

Another 20 percent of the $3 trillion were subprime. That’s a totally different category, based on credit score, risk, and other factors. How do you tell the difference? If you already pay mortgages on five homes, and you told the mortgage company those homes are investment properties, and then you buy grandma a house, it may be subprime. When your house is not a home for you and your family you should be honest with any financing, refinancing, or the financing involved with purchasing the home you are going to live in. After all you are telling the IRS that those are investment properties, aren’t you?

By March of 2007 one study shows $90 million of Alt-A mortgages were in default, while $450 million of subprime mortgages were in default. Here at Mortgage Blues we can say without reservation that defaults have spread from subprime to Alt-A borrowers. When 20 percent of three trillion are ALt-A, and 20 percent of three trillion are subprime, compare 90 million to 450 million and you can easily see the risk factors and differences between the two classifications. Mortgage lenders might be singing the blues because their classification system was flawed.