Just an FYI...

Damocles

Damocles

Accedo!
Staff member
Watch out for the Option-Pay ARMS that will be coming due in the next three years. Wachovia and WaMu were heavily into these, stay away from those banks. California and Florida were HUGE on these and are likely going to be last to recover from the mess that repealing Glass-Steagal began.

What they are: Loans where people have the option to pay a tiny amount that doesn't even cover the interest, Interest-only, or pay as if you have a 15 year or 30 year fixed rate. Of course, most pay the tiny amount. What they have been ignoring (that gorilla again) is the fact that after between 7 to 10 years, depending on the type you got, the options end and you pay the ARM prices, but they have gathered extra amounts because they chose the "tiny" option....

When they come due, some payments can actually triple if you haven't paid down any of your principal on the loan.

I hope nobody here was stupid enough to fall for this one.
 
Damocles said:
Watch out for the Option-Pay ARMS that will be coming due in the next three years. Wachovia and WaMu were heavily into these, stay away from those banks. California and Florida were HUGE on these and are likely going to be last to recover from the mess that repealing Glass-Steagal began.

What they are: Loans where people have the option to pay a tiny amount that doesn't even cover the interest, Interest-only, or pay as if you have a 15 year or 30 year fixed rate. Of course, most pay the tiny amount. What they have been ignoring (that gorilla again) is the fact that after between 7 to 10 years, depending on the type you got, the options end and you pay the ARM prices, but they have gathered extra amounts because they chose the "tiny" option....

When they come due, some payments can actually triple if you haven't paid down any of your principal on the loan.

I hope nobody here was stupid enough to fall for this one.
Click to expand...
They're going to have to get rolled over into a 40 or 50 year term product.
 
Which may be a problem when debtors see that they are upside down.
 
Troglodyte27 said:
Which may be a problem when debtors see that they are upside down.
Click to expand...
Yup. Hence my warning to stay away from these banks. Not only that, I dislike investing in companies that do this kind of thing to customers anyway.

I'd not buy their stocks if they were the only ones to buy.
 
Damocles said:
Watch out for the Option-Pay ARMS that will be coming due in the next three years. Wachovia and WaMu were heavily into these, stay away from those banks. California and Florida were HUGE on these and are likely going to be last to recover from the mess that repealing Glass-Steagal began.

What they are: Loans where people have the option to pay a tiny amount that doesn't even cover the interest, Interest-only, or pay as if you have a 15 year or 30 year fixed rate. Of course, most pay the tiny amount. What they have been ignoring (that gorilla again) is the fact that after between 7 to 10 years, depending on the type you got, the options end and you pay the ARM prices, but they have gathered extra amounts because they chose the "tiny" option....

When they come due, some payments can actually triple if you haven't paid down any of your principal on the loan.

I hope nobody here was stupid enough to fall for this one.
Click to expand...

well... i am tring to make it so that my mogage is my only loan for the next 10 years... thats my goal atleast... know that wont happen if i have kids though
 
Yes it will...it did for my hubby and myself, you find ways to do it!

Good luck and how exciting. I remember buying our first home $79,000. I was so nervous, couldn't sleep. Interest rate at 5%...oh, so long ago and far away!
 
Darn my first home was about 16% and 25K.
The good ol days.

Same house now would be 175k and 5% ;)
Seems like they will get you one way or the other.
 
Damocles said:
Watch out for the Option-Pay ARMS that will be coming due in the next three years. Wachovia and WaMu were heavily into these, stay away from those banks. California and Florida were HUGE on these and are likely going to be last to recover from the mess that repealing Glass-Steagal began.

What they are: Loans where people have the option to pay a tiny amount that doesn't even cover the interest, Interest-only, or pay as if you have a 15 year or 30 year fixed rate. Of course, most pay the tiny amount. What they have been ignoring (that gorilla again) is the fact that after between 7 to 10 years, depending on the type you got, the options end and you pay the ARM prices, but they have gathered extra amounts because they chose the "tiny" option....

When they come due, some payments can actually triple if you haven't paid down any of your principal on the loan.

I hope nobody here was stupid enough to fall for this one.
Click to expand...

arms are ok in a go-go housing market but otherwise suck, but these option arms are a disaster waiting to happen without lots of planning

but, some people would not be able to buy a home otherwise - buyer beware
 
We were told they would only get cheaper, being massed produced and all...
 
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