I just stumbled on this gem of a press release from S&P in April 2005:
There are really a lot of good quotes in here for a one page article, but here is a good one from a research analyst discussing Zero Amortization Subprime loans:
“Despite these risks, there isn’t any performance information available on any of these products just yet because they are still very new to the subprime market. Due to the time lag associated with delinquencies and losses in RMBS pools, and the nature of these risks, it will be several years before the product performance is tested. It is anticipated that all risks associated with these loans have been adequately covered.”
Well…I guess they have been “tested” now. So much for adequate coverage.