I’ve been told that the standard terms on option ARMS is that after the loan reaches 115% or 120% of the original loan amount that the loan “resets” and becomes essentially “fixed-rate” product, with payments to pay off the loan (ex: 120%) in the remainder of the 30 years.
I have yet to see the chart/data showing when, assuming most paid the minimum, the 115-120% resets hit as it will be sooner for these people than what the loan terms state if people were not paying the min.
(Bearnanke – since 2005, took me a while to be correct!)
