more than half of Washington Mutual's ARM borrowers can't even pay their vig these days.
"The answer, at least from banks, is already clear: Float the loans. The following figures are from Washington Mutual's
annual report: At the end of 2003, 1% of WaMu's option ARMS were in negative amortization (payments were not covering
interest charges, so the shortfall was added to principal). At the end of 2004, the percentage jumped to 21%. At the end
of 2005, the percentage jumped again to 47%. By value of the loans, the percentage was 55%."
from a Barron's article.
more stats:
"Some more numbers:
-- 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000
-- 43% of first-time home buyers in 2005 put no money down
-- 15.2% of 2005 buyers owe at least 10% more than their home is worth
-- 10% of all home owners with mortgages have no equity in their homes
-- $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007."
"The answer, at least from banks, is already clear: Float the loans. The following figures are from Washington Mutual's
annual report: At the end of 2003, 1% of WaMu's option ARMS were in negative amortization (payments were not covering
interest charges, so the shortfall was added to principal). At the end of 2004, the percentage jumped to 21%. At the end
of 2005, the percentage jumped again to 47%. By value of the loans, the percentage was 55%."
from a Barron's article.
more stats:
"Some more numbers:
-- 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000
-- 43% of first-time home buyers in 2005 put no money down
-- 15.2% of 2005 buyers owe at least 10% more than their home is worth
-- 10% of all home owners with mortgages have no equity in their homes
-- $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007."
It's a fairly common practice in several other countries.
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