the best explanation i've read about what exactly subprime and alt-a loans are, why they exist, and what they mean for where we are today from my favorite blogger on the subject.
"Think of it this way: subprime borrowers had proven that they couldn't carry 50 pounds, so the subprime lenders found a way to restructure their debts so that they were only carrying 40. Alt-A lenders took a lot of people who had proven they could carry 50 pounds and used that fact to justify adding another 50 pounds to the burden."
this is why alt-a is more dangerous than subprime. far greater losses can be expected - and in more expensive neighborhoods. alt-a loans are everywhere. anyone capable of paying their credit card debt on a monthly basis could qualify for a loan on a house that the lender knew they had no chance of ever being able to afford.
as for the end game of how we get out of this current situation:
"One of the main reasons we are in a mortgage credit crunch is that two possible models of "recovery" lending--subprime and Alt-A--got used up blowing the bubble. I think it will be a long time before lending standards ease significantly, and I think subprime will come back first. But I do suspect we've seen the last of Alt-A for a much longer time."
thoroughly worth reading.
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