Media Awakens To Lending Risk
More warnings on I/O loans, this time from Colorado. "In the Boulder-Longmont area, 54 percent of loans made last year were interest-only, up from 11 percent in 2002. In Denver, 50 percent of loans in 2004 were interest-only, up from 6 percent in 2002."
"Wil Armstrong, of a mortgage firm, said it was too early to know whether the interest-only loans will produce fallout. 'It wouldn't surprise me to see these have a higher delinquency rate, ultimately.'"
This line could have come straight out of the 1980's bust. "'There's not a cushion there if the market were to soften,' said Ira Litke. 'A high percentage of them are highly leveraged."