The “subprime crisis” is creeping out of the subprime sector

Nope, it’s starting to creep up into higher-rated mortgages.

Now the so-called Alternative-A mortgage sector, which loans to borrowers with better credit than subprime borrowers but not quite prime, is starting to hurt.

One Alt-A lender, American Home Mortgage Investment Corp. of Melville, N.Y., announced late last week that it was having trouble selling its mortgages into the secondary market and would have to cut its earnings forecast for the quarter and the year. At least five analysts downgraded the stock on Monday, and its shares fell more than 15 percent on the New York Stock Exchange. The shares dropped $2.37, or 11 percent, on Tuesday to close at $19.55.

Other Alt-A lenders that have taken hits in the market in recent days are First Horizon National Corp. of Memphis, Tenn., which some analysts predict may be forced to sell out to a bigger bank, and M&T Bank Corp. in Buffalo, N.Y.

Sure, this is only a small percentage of the loan market, as the story goes on to say. (That said, it is not so small as to be about one-third or so the size of the subprime market.) Nonetheless, the potential fallout is multifold.

First, it increase the jitter factor in the entire market.

Second, if Alt-A lenders are taking hits, they may feel compelled to raise rates on new mortgages they right, which itself will further ping the market.

Third, if many of these Alt-A mortgages are also ARMs, with or without shady rider clauses, economic instability that jacks up their interest rates will have its own ripple effects.

That’s just a few thinking points for starters.