Nope, they sure weren't. They were, however, affordability tools to people who had no prayer of affording the house they bought. The "option" they wanted was to live in a larger house.
It is mind boggling to me that 71% of option-ARM borrowers are negatively amortizing their loans in the face of declining home values. There is only one way for that to end, and I suspect it will come when they hit their loan-to-value caps.
This isn't a surprise. When I attended a financial "investment" group that consisted of members with non-financial background (technicians,etc) at a "investment seminar" group in Clairemont, with the exception of my wife and I, every person who purchased a home touted Countrywide's loan as being the "most flexible". Some said quote: "if I run out of money this month, I just use the loan's "flexibility" and make a minimum payment on it. I've done this for a couple of months already.
Ironic, some were trying to get me to refinance out of 30year fixed into an option arm loan.
