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Tuesday, April 17, 2007

Alt-A Update: "Completely Manageable"

by Tanta on 4/17/2007 11:29:00 AM

SunTrust appears to be having a bit of an Alt-A problem:

Mortgage profit sank 90 percent to $7.5 million from $77.6 million, hurt by lower margins on loans sold, lower servicing income and higher write-offs for "Alt-A" loans. The latter is short for "Alternative-A" loans, which often go to borrowers who cannot provide full documentation of income or assets. . . .

A SunTrust investor relations official, Greg Ketron, on a conference call said Alt-A pressures cut first-quarter profit by 5 cents per share and should reduce second-quarter earnings by a similar amount.

"We feel the situation is completely manageable, given the controls and guidelines that are in place," he said.

Completely manageable, huh? I take this as a promise that no Big Dog Bank is going to suddenly declare that "Alt-A" is "subprime," for potential bailout purposes. Don't you?