Frealess Frank

Stimulus Plan Fails: Larry Summers, Listen Up

Your comment that there will be a round two of mortgage defaults is correct, but not due to FNMAE and Freddy going back to sloppy credit standards. Their standards now are tighter than they have ever been, even before this debacle began. Round two of defaults will be waves of Option Arm mortgages resetting within the next two years. These loans were the worst products on the market and were strongly promoted by the lenders by offering double or triple normal rebates to mortrgage brokers. The banks liked them because they could carry the negative amortization on their books as profit.