{"id":1250,"date":"2007-04-01T20:26:02","date_gmt":"2007-04-02T03:26:02","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1250"},"modified":"2007-04-01T20:31:27","modified_gmt":"2007-04-02T03:31:27","slug":"a-farewell-to-arms-one-less-option","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1250\/a-farewell-to-arms-one-less-option\/","title":{"rendered":"A Farewell to ARMs: One Less Option"},"content":{"rendered":"

Are Option ARMs the next casualty in the non prime mortgage meltdown war? Wall Street fired the shot heard ’round the world in the mortgage default war by demanding repurchases from subprime lenders. Lenders either closed their doors or waved the white flag and allowed the conquering army to annex them<\/a>.<\/p>\n

The next battle in the mortgage default war may have already been fought and decided long before the soldiers have time to lace up their boots. That battle is the “dirty bomb” that we call the Option ARM<\/a>. I think Friday afternoon was the equivalent of Paul Revere’s midnight ride<\/strong>.<\/p>\n

I received an e-mail from IndyMac Bank<\/a>, a respectable non-prime and prime lender and leader in the negative amortization loan products, that said:<\/p>\n

1- IndyMac Bank is retiring all 12 MAT products over the next few weeks. This is the traditional low start rate, negative amortization loan.<\/em><\/p>\n

2- They are increasing the minimum payments and reducing the max price. No more four point rebates for mortgage brokers on an intentionally vague product. <\/em><\/p>\n

3- They cite the popularity of the FlexPay 5\/1 ARM for the 12 MAT demise. The Flex Pay 5\/1 ARM has a fixed rate for five years with an option to pay less than the interest due which does defer interest. The advantage to the Flex Pay 5\/1 ARM is that the potential negative amortization is completely predictable and not subject to the whims of interest rate fluctuations.<\/p>\n

Now, three initial thoughts cross my mind:<\/p>\n

1- Option ARMs are dead. <\/strong> That’s hard to believe. Jeff Brown states a great case for alternative loan products<\/a> last week when he says that builders build and lenders lend. He’s been around long enough to know that opportunists capitalize amid fear and vacuums. Lenders with high exposure and nebulous underwriting guidelines will be decimated when the piper comes calling in the form of higher defaults. Lenders with cogent underwriters will survive and cherry pick the good borrowers with this useful loan product.<\/p>\n

2- Wall Street is not at war with lenders but is betting on Read more<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Are Option ARMs the next casualty in the non prime mortgage meltdown war? Wall Street fired the shot heard ’round the world in the mortgage default war by demanding repurchases from subprime lenders. Lenders either closed their doors or waved the white flag and allowed the conquering army to annex them. The next battle in […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-1250","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-real-estate","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":3330,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3330\/indymac-bank-to-close\/","url_meta":{"origin":1250,"position":0},"title":"IndyMac Bank To Close?","author":"Brian Brady","date":"July 7, 2008","format":false,"excerpt":"Depositors are fleeing because legislators are pressing. But depositors may have been spooked by a letter late last week from Sen. Charles E. Schumer (D-N.Y.) to the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Federal Home Loan Bank of San Francisco, saying he was \"concerned that\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2002,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2002\/the-mortgage-liquidity-crisis-is-over\/","url_meta":{"origin":1250,"position":1},"title":"The Mortgage Liquidity Crisis Is Over","author":"Brian Brady","date":"October 3, 2007","format":false,"excerpt":"The liquidity crisis in the mortgage industry is over. I don't mean that we are going back to the lending guidelines of the go-go years of 2003-2006 but the non-conforming loan guidelines are coming back to a sense of normalcy. Dan Green talked about the non-conforming home loan market being\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1764,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1764\/when-lenders-stop-lending-another-lender-lends\/","url_meta":{"origin":1250,"position":2},"title":"When Lenders Stop Lending, Another Lender Lends.","author":"Brian Brady","date":"August 7, 2007","format":false,"excerpt":"The title is a funny play on words from advice Jeff Brown and Ron Feinberg gave me last week. When I returned from Inman last week, the market started melting down. I pride myself on my cool head but some days the Awshits sneak up and dominate my mind; Friday\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3352,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3352\/mortgage-market-week-in-review-fannie-and-freddie\/","url_meta":{"origin":1250,"position":3},"title":"Mortgage Market Week in Review – Fannie and Freddie","author":"Tom Vanderwell","date":"July 11, 2008","format":false,"excerpt":"Okay, here it is Friday afternoon and time to write the \"Mortgage Market Week in Review.\" You know how some newscasts warn you to tell the kids to go in the other room because what comes on next isn't going to be pretty? Well, there aren't any pictures but what's\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2418,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2418\/florida-first-certainly-california-next-nevadaand-absolutely-arizona\/","url_meta":{"origin":1250,"position":4},"title":"Florida First, Certainly California, Next Nevada,and Absolutely Arizona","author":"Brian Brady","date":"December 24, 2007","format":false,"excerpt":"Lenders don't love us no' mo'. Want a vacation crib in Miami? How about an investment property in Orlando? Show up with 40%, no seller carry-backs allowed, thankyouverymuch. This e-mail came in this morning from IndyMac Bank : Florida Guideline Restrictions Transactions securing properties located in the state of Florida\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4374,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4374\/mortgage-market-week-in-review-9\/","url_meta":{"origin":1250,"position":5},"title":"Mortgage Market Week in Review","author":"Tom Vanderwell","date":"September 12, 2008","format":false,"excerpt":"Well, it\u2019s Friday again, so it\u2019s time for another Mortgage Market Week in Review.\u00a0\u00a0 I\u2019m going to talk just a little about Fannie and Freddie and then deal with some of the other issues that are currently affecting the financial markets. First Fannie and Freddie: As EVERYONE knows by now,\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1250","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=1250"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1250\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=1250"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=1250"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=1250"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}