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The USA Today ran an article last week about the changing climate surrounding interest only and pay option ARM mortgages. This falls in line with the USA Today's current stance of forcing America to believe that the housing market is going to collapse.

Ms Chu sneaks a little plug in the middle of the article about how a bond rating manager says that the tightening of these exotic mortgages "could have a cooling effect on the housing market".

I'm afraid Mr. Greenspan is mostly to blame for all this negative backlash. Mr. Greensapan does not like these mortgages and he's not afraid to share his opinion. As a result, he has the other Fed Governor's such as Susan Bies jumping on the bandwagon.

My opinion is that this will, much like the housing bubble, turn out to be a non-story. The USA Today is following the lead of our cable news channels in trying to scare us into being interested in the news. Interest Only and Pay Option ARMs are excellent products for many borrowers providing the greatest flexibility in managing cash flows. These products will continue to gain popularity with both real estate investors as well as owner occupied borrowers looking for the flexibility to invest their money in other instruments.