[quote=deadzone][quote=sdrealtor]My best friend had a 5/1 ARM that reset last year. He doesnt have any equity but isnt underwater either. He makes plenty of money, comes from a wealthy family and has plenty saved so he isnt worried at all. The reduction in his monthly payment was enough to make the monthly payments on his new BMW.[/quote]

Is this interest only? If so, how can he not be underwater? I am still waiting for an example of an interest only loan made during the bubble where the payment went down.[/quote]

Actually it is an interest only loan. He put 10% down and has since paid off his 10% second. HIs first is interest only and went down several hundred dollars a month when the 5/1 arm reset at a much lower rate. I keep telling him to go to a 30 yr fixed but his payment is so ridiculously low he cant see straight to doing it. His mortgage is less than 1/2 what his property would rent for.