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Americans are still shunning adjustable-rate mortgages 10 years after the crisis

Americans are still shunning adjustable-rate mortgages 10 years after the crisis

For long bonds to shake free and surge higher, Khater said, would likely require a “substantial increase in inflation. I don’t see the kind of rise in inflation that would be needed.”

“I do believe we’ll see more ARMs,” adds Rick Sharga, executive vice president for Carrington Mortgage Holdings, a mortgage lender and servicer in Orange County, California. “But I don’t believe we’ll see them issued like in the last housing boom.”

“In the last boom, there were lenders who were giving negative amortization loans,” Sharga pointed out. “For an investor who knows what he’s doing, it’s a useful tool.”

Negative amortization loans allow the borrower to choose the monthly payment, which in most cases was lower, thereby increasing the total amount owed. (Here’s some historical context on how well those dubious products worked out for the mortgage finance system as a whole.)

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