The concern regarding future MTA ARM performance among investors, highlighted by the overwhelming response to the preceding week's Bear Stearns conference call on the matter (see ASR 8/1/05), continued to spill into last week. MTA ARMs currently constitute about 40% of non-agency MBS issuance.

"In many ways this product has become the poster child for all affordability lending by offering the lowest payment mortgage in some of the fastest growing housing markets. It has also become a lightening rod for criticism because of its negative amortization features and the potential for payment shock when the loan is recast," Bear analysts wrote last week.

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