Free Republic

UPDATE: Option-ARM Mortgages Turning Worse Than Subprime (Updates with companies declining to comment and further details in first, second, fourth and 13th paragraphs.) NEW YORK (Dow Jones)--For the third straight month, option adjustable-rate mortgages are generating proportionally more delinquencies and foreclosures than subprime mortgages, the scourge of the housing crisis. A further acceleration of troubles among the loans could mean higher-than-expected losses for Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM), as well as the Federal Deposit Insurance Corp.'s own insurance fund. "The realization of the issues related to option ARMs is just beginning," says Chris Marinac,...

If you work in the mortgage industry, the closing down of Bank United should come as no surprise. Back in November, Bank United suspended all mortgage activities and turned their mortgage department into a loan modification division. They were in charge of modifying each and every loan they still owned. Bank United, you see, from about 2004-2007 specialized in a loan known as the Option Arm.

They promise the American Dream: A home of your own -- with ultra-low rates and payments anyone can afford. Now, the trap has sprung For cash-strapped homeowners, it was a pitch they couldn't refuse: Refinance your mortgage at a bargain rate and cut your payments in half. New home buyers, stretching to afford something in a super-heated market, didn't even need to produce documentation, much less a downpayment. Those who took the bait are in for a nasty surprise. While many Americans have started to worry about falling home prices, borrowers who jumped into so-called option ARM loans have another,...