Option ARMs See Rising Defaults - WSJ.com

Damn Clinton and his liberal poor black agenda... Oh wait, maybe we really are suffering from a bunch of greedy bankers and homeowners going wild on (what is now) the tax payer's dime.

Option ARMs See Rising Defaults - WSJ.com: "Often, these loans were taken out without full documentation of borrowers' incomes and assets, and the reported incomes were often overstated, analysts say. Option ARMs are concentrated in areas such as California and Florida that have seen some of the biggest home-price downturns.

Option ARMs, which have been largely abandoned, give borrowers multiple payment options, including a minimum payment that often was less than the monthly interest due. Borrowers who made the minimum payment on a regular basis often saw their loan balances grow, also known as 'negative amortization.' And with home prices falling, more than 55% of borrowers with option ARMs owe more than their homes are valued at, according to J.P. Morgan Securities Inc."