“Interest-only loans are back,” says Andy Little, principal at John B. Levy & Co., “and they’re back in a big way.” A full 24% of the loans that were securitized in the first quarter of 2011 through conduit lenders were structured with some sort of interest-only period. “What makes this so curious,” according to Little “is that a lot of people were convinced that the real estate finance car wrecked and rolled off the cliff because of these types of loans. And yet here we go again.”

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