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Wednesday, August 13, 2008

Countrywide Option ARMs Deteriorate

by Calculated Risk on 8/13/2008 10:41:00 AM

From Reuters: Countrywide option ARM home loans deteriorate more (hat tip Brian and Branden)

Countrywide Financial Corp said thousands of borrowers with $25.4 billion in option adjustable-rate mortgages (ARMs) owe almost as much as their homes are worth ...

Another sign of borrower distress: One in eight is at least 90 days late on payments.

As of June 30, the typical borrower owed 95 percent of the value of his home, up from 76 percent when the loan was made ...

Seventy-two percent of borrowers were making less than full interest payments, and 12.4 percent were at least 90 days delinquent.
Here is the CFC 10-Q filed with the SEC.

CFC Option ARMs Click on table for larger image in new window.

This is the Option ARM table from the CFC 10-Q. Notice that 83% of loans were stated income.

From Reuters:
"People still don't understand what a catastrophe this is," said Christopher Whalen, senior vice president and managing director at Institutional Risk Analytics of Torrance, California. "The guys who are really on the hook are Bank of America shareholders."
I think it's the CFC bondholders who are "on the hook" since BofA hasn't guaranteed the CFC debt.