“According to a Fitch Ratings report, nearly 90 percent of the borrowers who took out an Option ARM in 2006 were suffering from negative amortization. At least 60 to 80 percent of Option ARM borrowers make just the minimum payment each month, according to industry estimates.”
FB: Dammit Jim, I’m a renter not a buyer (even though I technically bought)! This is definitely going to get uglier. The housing market we had in 2005-2006 resembled the young, hot Britney. Today’s housing market resembles the current Britney. The housing market we are going to see in a couple of years will be more akin to Britney 20 years from now.
Congress just passed the whole stimulus-mortgage thingee. Bush is expected to sign it this week. However, Fannie and Freddie currently only allow refis up to 95% of Loan-to-Value. Thus, it doesn’t look like to me that any of these neg-am, Option ARM folks are going to be able to take advantage of the higher conforming loan limits.
Since this is an election year and much of Congress will soon be out campaigning, I wouldn’t expect another mortgage bill this year. I think it’ll be next year before Congress passes some new bill in an attempt to put this whole mortgage fiasco to the taxpayers. By then it may be too late. At least I hope so.
But yeah, with only 30% or so of Option ARM folks making more than the minimum payment … it’s definitely going to get uglier.
