What's your take on option ARMs?

[Erik]

If you haven't already seen this scare article from Business Week, take a look:

http://www.businessweek.com/magazine...7/b4000001.htm


While I am sure that there has been ample misrepresentation by unscrupulous loan officers selling option ARMs over the past two years, can the blame be placed completely on mortgage "professionals" when borrowers up "upside-down" in their homes, or facing payments they can't make? (Secret's answer will be an emphatic "yes" - I'm calling that one now)

To what degree are the consumers to blame for the financial trouble in which they now find themselves for not completely understanding their financial instrument? Should they have just been more thorough in their due dilligence? Reading the fine print isn't a fun thing to do, but it will often save one's bacon.

Should there be more required disclosures for option ARMs?

[GLOAT]

I personally do not subscribe to the notion of "qualifying a client for more house". As a whole, Loan Officers need to lose the car salesman approach to the business. To the informed client in a commission income field, a Pay Option Arm can be an asset if used as an sadvancement tool. But if used as a temporary fix, can destroy lives as well as communities. There's a fine line between informing one of all options and the blind leading the blind.