With mortgage origination processes changing markedly even compared to just a few years back, the definition of credit has evolved. One sector, in particular, that has been affected by these changes is Alt-A collateral, where history can no longer provide a good basis of predicting future performance, analysts said. Finding new ways of defining the product becomes crucial at this juncture.

In a recent report, Fitch Ratings said it "believes the Alt-A sector can no longer be defined under one definition but requires a few definitions." These sectors, said the rating agency, can be distinguished from one another by looking at differences in credit risk. Analysts separated the Alt-A collateral into three subsectors: Prime Alt-A, Alt-A-, and Alt-B, often called subprime Alt-A.

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