The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Ramsey Su who wrote (54572)	2/23/2006 3:36:11 PM
From: ild	Read Replies (2) of 110194

Berson's Monthly fanniemae.com Although the use of ARMs has fallen a bit, the ARM share remains much higher than it historically would have been given the level of FRMs and the spread between FRMs and ARMs. We continue to believe that affordability has been the driving force keeping the ARM share higher than normal. Moreover, the drop in affordability has resulted in a sharp increase in the use of riskier mortgage products as homebuyers attempt to lower their payments in high cost areas. Analysis by Fannie Mae’s Mortgage Market Analysis group indicates that the share of mortgage originations using negatively amortizing products spiked in 2005, especially in the “Alt-A” portion of the market where they climbed to almost a 50 percent share. Most of the rise was in the first half of the year, however, with only modest additional increases later in 2005 – perhaps in response to concerns expressed by regulators.

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