Wachovia Still Does Not Understand Pay Option ARM Risk

Wachovia Corp., which ousted its top executive after estimating it may lose more than $4.5 billion on adjustable-rate home loans, will start calling would-be borrowers to explain the risks of such mortgages.

[Ball Bag]

These guys are retards. Calling people to explain the risks of ARM's is like calling a drug addict to explain the risks of crack. There was a risk that these banks took when they doled out these ridiculous loans to people with less-than-stellar credit. The banks got theirs. Instead of wasting dough on making pointless phone calls, how about they took a good long look in the mirror. THEY should stop lending to people with bad credit. Another thing, stop adjusting rates to astronomical proportions and weaseling in unnecessary late fees and other hidden costs and penalties. Fuck Wachovia!

[Brunopiggy]

The Wachovia "Pick A Pay" ARM is an excellent mortgage product assuming you understand the loan. This mortgage is best for a more sophisticated type of borrower who understands how such a loan "works". Each month the borrower is able to elect up to 4 different options for payment.
Option 1 - Minimum payment, which may result is negative amortization
Option 2 - Interest only, loan balance remains the same
Option 3 - Full principal and interest based on the original term of the loan
Option 4 - Accelerated amortization based on a 15 year term

The interest rate on the “Pick A Pay” ARM is tied to a specific “index”(usually the Cost of Deposits Index, CODI or the Cost of Savings Index, COSI), among others. The index value can change monthly, up or down. The “margin” remains the same through the life of the loan. The lower the margin, the lower the rate. Index + Margin = Interest Rate.

So ball bag before you judge, educate yourself.

[Wamu Oberserver]

Wachovia Pick A Pay is finished. And the WAMU Option ARM also. This is an election year for crying out loud. Is everybody blind?