Index Shift Made Option ARM Market Growth Possible, OTS Finds-But Major Risks Remain
November 10, 2005
Option ARMs are one of the hottest products on the mortgage market landscape, but lenders and others trying to come to grips with the loan need to consider how they differ from the negative amortization loans originated by thrifts in the past. Earlier negative amortization ARMs were tied to the 11th District cost-of-funds index, which helped thrifts match funding for a product that was largely held in portfolio. But today’s…