One more thing: If I understand the accounting rules correctly, public companies are allowed to book revenues for ARM payments at a steady rate over the entire life of the loan. So, for example, if Countrywide wrote a 2-year ARM that had a $1K monthly payment for 2 years and then a $2K monthly payment for the remaining life of the loan, then Countrywide is allowed to book revenue at a rate of $1.94K per month for the life of the loan. Look for banks such as Countrywide, Wamu and others who wrote lots of ARMs to either do major earnings restatements as they foreclose on those loans or to take huge charges.
