Wednesday, January 2, 2008
More on the next BIG US housing problem “pay option ARMS”
"Subprime... is 2007’s story. 2008 will be the year of the pay option ARM, also known by various institutions as “Pick-a-Payment”, “Flex Pay”, or “Cash Flow ARM”. This homeowners’ delight is a mortgage that comes with a “virtual” credit card, so when you fancy making a lower monthly repayment on your loan you can use your card. But that additional credit facility, of course, comes with a higher interest rate, and an upper limit at which point you’d better be ready to pay the lot back."