What We're Hearing

You've heard the story before and now you're hearing it again -- that existing payment option ARMs (those that haven't been refinanced or already gone bust) are a ticking time bomb, waiting to explode, wreaking havoc in the housing/foreclosure market. Fitch tells us that $134 billion of POAs will recast over the next two years. But wait: rates are low. Will the 'old' rate 'recast' higher or lower? And just which mega banks are holding these loans? According to National Mortgage News' Quarterly Data Report, no one is making these loans any more. The POA market peaked in late 2007. And which firms were the market leaders then? Answer: Wachovia (now the headache of Wells Fargo); Countrywide (now the headache of Bank of America); EMC Mortgage (now the headache of JPMorgan Chase); MortgageIT (Deutsche Bank's nightmare); and Aurora Loan Services whose parent, Lehman Brothers, went bust a year ago...