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‘Exotic’ home loans put lenders at risk

Part 3: Who gets hurt in a real estate downturn

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Editor's note: Signs of a slowing real estate market raise questions about who in the industry will be most vulnerable to a housing recession. Fewer real estate transactions means there is less money to spread around, and that will impact everyone. But some will be hit harder than others – especially if they are not prepared. In this special series, we examine who's most at risk. (See Part 1: Condo craze days may be numbered and Part 2: Newbie real estate agents bet on survival.) Federal Reserve Chairman Alan Greenspan calls them "exotic loans." The mortgage industry calls them "innovative mortgage products." And the National Association of Realtors refers to them as "specialty mortgages." Whatever you call them, the rise of non-traditional home loans such as interest-only loans and negative amortization mortgages have helped lots of families buy homes, fueling the booming real estate industry. But the red-hot housing market is increasingly viewed as a pending p...