NEW YORK - From the rating agency to the investor panels and all throughout the different presentations, credit issues relating to ARMs were a big topic at the Bear Stearns first-ever Adjustable Rate Mortgage Conference 2005 held here last week.

As home prices have risen, panelists said affordability considerations have caused a spike in ARM issuance - particularly the more credit- sensitive versions such as MTA teaser ARMs and hybrid IOs - introducing new risks to the mortgage market. "ARMs are a cash-flow product as far as the balance sheet of the U.S. homeowner is concerned," said Steve Abrahams, senior managing director at Bear.

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