Beer pong!
is now big business.
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Investing opportunity?
From this WSJ article about the woes of Countrywide Financial (CFC):
It is unclear how well borrowers will cope once the higher payments set in. These option ARMs, many granted in 2004 and 2005 at the top of the housing boom, will be “stress-tested” beginning next year, S&P’s Mr. Plesser says.
A “significant portion” of those option ARMs are covered by private mortgage insurance against losses because of defaults, the Countrywide spokesman says.
If option ARMS are protected by private mortgage insurance (insurance for those who put < 20% downpayment), PMI companies may suffer unforeseen losses next year due to policies being triggered by homeowners’ failures to pay. These payments would go to Countrywide and other lenders. It may make sense to short companies who do significant business in PMI…