Sep 13 2009

Interest Only Mortgage Time Bomb: $71 billion in Loans will Reset in next 12 Months. Total Loans Outstanding at $908 Billion. Average Balance of $324,000. Median U.S. Home Price $178,000.

Interest only (IO) loans seemed like a viable mortgage option when home prices were appreciating on a double-digit basis every year.  The interest only loan allowed borrowers the option of making no principal payments for 5, 7, or even 10 years.  Now why would someone not make any principal payment for such a long time?  […]

Sep 8 2009

Option ARM Disaster Arrival: Mortgages More Problematic than Originally Thought. $134 Billion Recasting in Next Two Years. 94 Percent Made only Minimum Payment. Only 35,000 of the 1 million Option ARM loans Modified.

Option ARMs, the dubious name for a mortgage product of financial destruction, are back in the limelight showing that they have not gone away.  Everyone by now has heard about option ARMs.  These toxic mortgages allowed borrowers a buffet of payment options.  However, in recent data released this week we are told that things are […]

Jun 20 2009

Downey Savings and Loan: The Anatomy of an Option ARM led California Banking Disaster. Other People’s Money Delusion.

On June 15, 2009 the Office of the Inspector General issued their audit report regarding the failure of California’s Downey Savings and Loan Association (Downey).  Now the story of DSL is important because it highlights the entire process of how we came to this financial crisis that now threatens the economic stability of the world.  […]

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