by Bill McBride on 1/12/2010 01:58:00 PM
Tuesday, January 12, 2010
Laurie Goodman and others at Amherst Securities released a new research note yesterday: Option ARMs - Performance and Pricing
They make several important points (quoted section are from Amherst):
Click on graph for larger image in new window.
This chart shows the expected payment shock coming in 2010 and 2011 from Option ARMs. This chart includes projected increases in LIBOR (if LIBOR stays low, the shock will not be as high), and the recast due to reamortizing the loan over the remaining period.
Update: There is question on the size of the payment "shock". The report suggests many payments will double, but other estimate are much lower.
Posted by Bill McBride on 1/12/2010 01:58:00 PM