The Business Journal of Phoenix - July 18, 2007
by Jan Buchholz

Four of the 10 fastest-growing suburbs in America are in the Valley, according to a survey released this week by Forbes magazine.

The data — culled from U.S. Census Bureau growth statistics and provided to Forbes by Demographia, a St. Louis firm — show Buckeye as the second fastest-growing suburb in the United States from 2000 to 2006.

Buckeye grew from a population of 10,147 to 29,615, a jump of 192 percent. Surprise came in third, growing from 32,000 to 86,000, a 166 percent increase. (Officials in Surprise say the current population tops 100,000.)

Goodyear’s population during the six-year time frame increased 143 percent, from 19,500 to 47,400, giving it the fourth position on the list.

Avondale came in ninth, with a population increase of 102 percent, from 37,000 to 75,400. Also on the list at No. 24 was Gilbert, with a 70 percent increase, from 113,000 to 192,000.

The fastest-growing suburb in America was Lincoln, Calif., northeast of Sacramento. Rounding out the top 10 were Plainfield, Ill., outside Chicago; Beaumont, Calif., east of Los Angeles; Frisco and Wylie, Texas, both near Dallas; and Woodstock, Ga., north of Atlanta.

Twenty of the 100 fastest-growing suburbs were in Texas and 18 were in California.

In an amazing development Option One has eliminated the 2-year fixed subprime ARM loan from its lending portfolio. The 2/28 as it’s known in the industry was the staple of subprime refinance options during the recent run-up in housing.

The elimination of this product from a former leader of the subprime world is a positive step to reducing the effects of exploding ARMs on borrowers who often leveraged themselves to the hilt borrowing on a short-term teaser rate.

I wonder if others will follow suit and how quickly it will happen. If you’ve seen the effects of ARM resets and their role in foreclosure you have to think this is a step in the right direction for the industry.

Here is the full text of the announcement from Option One:

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Option One Announces an Exciting Product Change That Benefits All Borrowers with 2/28 ARM Loan Applications Currently In Our Pipeline

As you know, the subprime mortgage industry continues to change rapidly. At the end of June, we saw the release of final Interagency Guidance, which among other things, will lead to a change in the way all lenders underwrite 2/28 and 3/27 ARMs. Last week, Moody’s and S&P announced downgrades of subprime bonds. Although the downgrades were negative for the subprime market in general, we were very pleased to see Moody’s report that their data reflects Option One collateral is performing better than average, relative to our peers. Quality performance for a wholesale lender begins with quality brokers, so the Moody’s data reflects as well on you, our Option One customers, as it does on us. For that, we’d like to thank you.

The latest news impacting our industry, which we received this past Friday, is that the rating agencies have made significant changes to their loss coverage assumptions on subprime 2/28 ARM loans. The net result of this is that subprime 2/28 ARMs lost a great deal of their economic value over the last five to 10 business days. The loss in value is significant enough that we made the decision that the best thing for us to do is to eliminate our 2/28 ARM product and give you and your borrowers the benefit of longer fixed periods on ARM loans, with no extra cost to you or your borrower.

We want you to know that we will honor the approved rate on all 2/28 loans you currently have in our pipeline, but fund them all as 3/27 ARMs. This means your borrowers will all get an extra year of the low fixed rate for free. For those loans in the pipeline that have prepayment penalty periods, we will leave them all at 24 months or less. This means your borrowers will not only get an extra year at a low fixed rate, they will also get at least one full, penalty-free year before their first adjustment date. This is an excellent deal for your borrowers.

Elimination of the 2/28 ARM is the only change to our product menu and is effective Monday, July 16, 2007, at 8 a.m. ET, contact your Account Executive with questions.