Huntington Herald-Dispatch (WVA) (03/05/08)
Countrywide Financial Corp. sees a tough road ahead due to its heavy concentration of pay-option, adjustable-rate mortgages. As of the end of last year, the country's biggest home loan provider had almost $29 billion in pay-option loans, with approximately $26 billion of the total having grown beyond the original loan amount. While such loans give borrowers the choice to make a lower payment, they can result in the unpaid portion being added to the principal balance. In addition, pay-option ARMs have the potential to provide high yields to investors who purchased the loans from lenders during boom periods.
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