Rate cuts won't prevent housing market's "neutron bomb"

02/8/2008 | Bloomberg

Federal Reserve interest-rate cuts are doing little to help the 1 million homeowners that hold $500 billion in option adjustable-rate mortgages. Some option ARM holders could see their monthly payments double, compared with the average 8% increase for subprime borrowers. "We call them neutron loans because they're like a neutron bomb," said Brock Davis, a broker with U.S. Express Mortgage Corp.

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