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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (46107)11/25/2005 9:40:25 AM
From: Ramsey Su  Read Replies (1) of 110194
 
Keep in mind though that a huge portion of the IOs were done back in late 03-early 04 when the Libor was at 2.0%, or six month constant maturity treasury (CMT)was at 1.00-1.50%. So if those are resetting every six months, the debtor will be getting a steady dose of increasingly stressful monthly payments. These are pretty nasty ARMs toxic shocks in my book.

Russ, would these loans be less toxic if they are fully amortized instead of I/O?

Take a look at the table at the bottom here. Do you know most of these very toxic 2-28s are amortized and NOT I/Os?
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