In my last post I discussed the idea that bankers are not really any more ethical than any other lender. My example was Washington Mutual (Wa Mu). I could have used CountryWide, or really anyone who was aggressively selling Pay Option ARMs. It is not a coincidence, then, that I stumbled across several articles today discussing WaMu, and Pay Option ARMs.
First off is "Dr. Housing Bubble"
And for those of you who say we didn’t see this coming, that paragraph was pulled from a Businessweek article in 2006 title “nightmare mortgages.” Of course, Wall Street is no longer buying this crap so that $500 billion is going to implode and no one is going to stop it. Also, you need to remember that 60 percent of that mortgage portfolio of Pay Option ARMs is here in sunny California making us confront a $300 billion time bomb.
Mr. Mortgage (a California based broker) also discusses the joys of the Pay Option ARM:
About 6 weeks ago, The Wall Street Journal absolutely nailed the Pay Option ARM story. It is about time the mainstream picks up on this. In my opinion, this is “the big one.” The “Subprime Implosion” may have been only the “pre-quake” with The Pay Option/ALT-A Implosion being the “big quake” and “The Prime Implosion” being a long series of scattered aftershocks.
Should we be surprised that WaMu has more defaults than it can handle (portfolio.com)?
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