The "Nuclear Option" or "The Option ARM"
Remarks by Alan Greenspan
"Anyone who has an "Option ARM" and doesn't refinance it before the bubble bursts will lose their home. ..."option ARMs, which allow for a limited amount of negative amortization. These products could be cause for some concern both because they expose borrowers to more interest-rate and house-price risk than the standard thirty-year, fixed-rate mortgage and because they are seen as vehicles that enable marginally qualified, highly leveraged borrowers to purchase homes at inflated prices. In the event of widespread cooling in house prices, these borrowers, and the institutions that service them, could be exposed to significant losses.
. Many borrowers of the "Option ARM" thought they had a fixed rate mortgage, did not know that the minimum payment could go up over 1000% at any time if the LTV were to go above 115%. The homes are financed up to 95% of the appraised value which would only require a 20% correction while many economist are forecasting a 40% drop. in a survey conducted by MLS. Many borrowers believe they have a 5-30 year fixed payment. Our "Financial Experts" will review any borrower's loan with the borrower free of charge. We have over 4500 complaints listed against the nation's leading lenders.