Now that the subprime loan debacle is pretty much behind us, the next threat on the horizon for the mortgage industry are Option-ARMs and Alt-A loans. Alt-A loans are loans made to people just above the sub-prime cutoff. Option-ARMs are loans that allow the borrow to choose from a variety of different payments each months, including payments that are less than the interest that has accrued during the previous month. As the graph here shows, a large wave of these loans are getting ready to reset (have their interest rate adjusted) in the next two years.
Reuters has a story about the Option-ARMs here.
Friday, September 18, 2009
The Next Mortage Crisis: Option ARMS
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4 comments:
I believe as we have firmly faced sublime loan debacle we stand a good chance against mortgage crisis as well and it is just a matter of time and we will be through it.
Agree with Laguna Beach...if we all plow through we'll get through these issues...mortgage crisis and then the upcoming commercial crisis.
That is true; it is just a phase of time. Housing crisis will be resolved soon until then loan modification has to be there. This is a part of recession.
Good post Shaun and thanks for sharing those links too.
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