Defaults on a popular form of mortgage that gave home buyers a choice of how much to pay each month are rising and could rival those on sub-prime loans, potentially causing more trouble for investors and banks.

Nearly $750bn of option adjustable-rate mortgages, or option ARMs, were issued from 2004 to 2007, according to Inside Mortgage Finance, an industry publication. Rising delinquencies are creating fresh challenges for companies such as Bank of America Corp., J.P. Morgan Chase & Co. and Wells Fargo & Co. that acquired troubled option-ARM lenders.

Wall Street Journal