Truth about Option ARM !!

5/20/09

U.S.

Alt-A active: $469 billion

When we talk about the $500 billion in Alt-A mortgages this is what we are talking about. Last time I checked $469 billion does not mean the problem has gone away. Businessweek came out with a chart only last month showing how Pay Option ARMs will be recasting over the next few years: See above Chart

I’ve added a reference point for all those people who seem to think that Option ARMs and Alt-A loans have somehow disappeared from the market. The game is just starting. Currently, we are seeing less than $2 billion per month of these loans recasting. However, in 2010 we are going to start seeing $8 to $10 billion per month recast, nearly 5 times the current rate. The chart states “months to 1^st reset” but they are referring to recasts brought on by negative amortization. And as you will see, since the majority of these loans are in California the bulk are underwater Jacque Cousteau style.

The above I reprint from other blogger. Folks, the real game is just started. I am expecting more foreclosure coming for whole country with no end in sight. And I do not see our stock market would doing any good later part of year.