HousingWire reported around $134bn of option ARMs are set to recast over the next several years. Defaults among pay-option adjustable-rate mortgages (ARMs) will continue to rise, especially as payment shocks still loom for loans set to recast in coming months , but pricing of securities already reflects “simply awful” performance, according to the latest commentary from Amherst Securities Group.
Option ARMs in securitizations issued in 2006, so far experienced a 49% default rate, second only to subprime loans of the same time frame (61% defaulted). Alt-A loans follow at 39% defaulted, and prime loans finish out the categories at 11% defaulted
