Here at the Loanzen blog we’re going to look at everything from loans submitted into our system to external market data — we’re about equal opportunity on this block. Let’s take a pass at recent data regarding the infamous option ARM loan. Sorry to ruin your morning.
Between now and 2011 huge amounts of adjustable rate (option arm mortgages) are set to recast. What does this mean? Pain. Pure pain. Once the loan recasts, payments made by the borrower fluctuate over time with the changing interest rate (a concept that many borrowers simply didn’t grok). Circa 2004, option ARMs were a decent instruments when equity value homes were rising like Don King’s hair. They are now terrible — if not plain disastrous — tools of mass destruction.
What’s even crazier? Look at the amount prime mortgages recasting. Scary. What do you think about this data? Please leave your thoughts in the comments and don’t injure the messenger. We like our limbs.
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