More than $200bn of outstanding pay-option adjustable-rate mortgages (ARMs) originated and securitized from ‘04-’07, according to market commentary by Moody’s Investors Service this week.
This sector shows “dismal” performance, with more than 40% of borrowers 60 or more days past due on payments. And many of these loans have yet to experience a recast event, when initial minimum monthly payments jump as much as 60%, according to sources interviewed by HousingWire for an upcoming issue.
“Even though borrowers with Option ARM loans have the option to make monthly payments typically lower than the accruing interest on the loan, many borrowers are choosing a different option–not making any payment at all.”
Moody’s said the performance is comparable to subprime, despite the trend of
more acute negative equity among Option ARMs than subprime....
http://www.housingwire.com/2009/12/04/moodys-links-option-arm-subprime-performance/Check out the geographic distribution... looks like CA has yet
another time bomb about to blow.
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore