Option ARMs still pose risk

Option adjustable rate mortgages are still risky as the market approaches a bottom. Many of these mortgages, which accounted for $750 billion worth of mortgages made between 2004 and 2007, are not eligible for refinancing, and many could spiral into default as homeowners continue struggling to make payments. Option ARMs have been overshadowed in the housing crisis by subprime loans, but the balances on option ARMs are generally larger, and 600,000 option ARMs could reset within the next four years, threatening a market recovery.