Aug. 20, 2007


  • no depth...way too superfical...
  • Despite their headline worthy structures, payment optional ARMs are traditionally "prime" mortgage products and IOs are often "prime" mortgage products. The flexibility and affordability of the monthly payments also help borrowers keep their payments current. To identify potential troubles in that sub-segment you should look for property depreciation in those geographic segments which could lead to rapidly increasing LTVs (especially due to the lack of principal payments). Fundamentally, this is a time when CUs should thrive since they are primarily balance sheet lenders, and as such, should be much more focused on prudent underwriting as opposed to origination volume.