Banks rallying here because they had a window between March and now, where subprime resets slowed considerably and Alt-A and Option ARM's were not ramping up. That gave the false impression that things were "improving". That window has closed. These loans are resetting at an increasing rate from now through 2012.
With Option-ARM's, I believe 80% of all borrowers chose the interest-only, negative amortization payment, which means their loan balance increased as home value plunged...
You can bet that they will be walking away from the loan when the reset comes, leaving the banks holding the bag.
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