Mortgage Lenders Nationwide

Option ARMs Banking Backdrop of 2009After the subprime mortgage debacle continues as the asset securitization crisis unfolds, another chapter up its sleeves with added melancholy, called the Option ARMs. With billions of Option ARMs due for recast in 2009 and 2010 another crisis is on the making. But this time problems are expected to be more pronounced than the subprime crisis since the economy is already nearing its trough, the consumer confidence has slumped to an all time recent history low and financial markets are in a gridlock. Making the matters worse is the unrelenting fall in the US housing market which is showing no signs of stabilization.  Get the Mortgage News as it happens>

Lenders made Option ARMs with ‘teaser’ features to borrowers, which included making lower minimum payments for initial years and then loan being reset to higher payment schedule thereafter. If that was not enough, these loans had another feature called “negative amortization”.  With US housing prices declining and the burgeoning loan-to-value skyrocketing, Option ARMs delinquencies are set to increase dramatically.  Article was written by Reggie Middleton.  Read the complete home financing article>