Option ARMs: Good News, Bad News
The good news, according to a Barclays Capital report, is not as many Option ARMs will recast in 2011 as forecast earlier by Credit Suisse. The bad news is borrowers are defaulting en masse before the recast. From Bloomberg: Option ARM Defaults Shrink Size of Recast Wave, Barclays Says (ht Brian) The wave of “option” adjustable- rate mortgages recasting to higher payments, projected by some economists to represent a looming source of foreclosures that will hurt housing markets over the next few years, will be smaller “than feared” because many borrowers will default before their bills change, Barclays Capital analysts said. …
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