The two key problems for option ARMs are negative equity and the coming recasts (with payment shock). “Across all categories, option ARMs have more negative equity than other products.” and “most of subprime pay shocks have already occurred, while most of the options ARM pay shocks are yet to come.
Calculated Risk: Option ARM Recast Update (via Atrios)
Click through for the scary graph. Everyone wants 2010 to be the turnaround year. This sure casts a pall over that hope.
