Why would people who can afford conventional 30-year mortgages sign on to Option ARMs especially if the fees are higher with prepayment penalties?

Like the example in the LA Times article, people start out with the best intentions, but they then find themselves getting seduced by the “instant wealth.”

I’m guessing that the fallout will be much worse than industry analysts have expected.

bob007, I don’t think that it’s fine to buy overpriced houses. If you overpay for a house, you’re giving up on many other things; and in the end you’re worse off than you would’ve otherwise been. Think about it. It’s not OK.