Currently Reading

Not too long ago the staff at Mortgage Blues warned about option arms. Now these home loans are beginning to worry borrowers and lenders. One real possibility is that borrowers are behind on their mortgage as they keep up with their credit card payments. Of course the opposite might be true. But as soon as credit card rates skyrocket to the maximum allowed by law the bubble might burst for these home owners.

Many option ARMs are scheduled to reset to higher payments this year and next — an estimated half trillion dollars worth during 2006 alone, according to mortgage giant Freddie Mac. Federal and state financial institution regulators, along with some prominent lenders, worry that not all borrowers now making minimum payments are aware of the size of the monthly payment increases they may soon face. Worse yet, some of these loans were made to people who were on the financial bubble to begin with: their credit was stretched to make even the minimum payments necessary to afford the house they purchased.

To assume that all borrowers currently making the minimum payment can absorb huge increases is not realistic.

5 Responses

  1. [...] Nancy wrote a fantastic post today on “Option ARMs Worry Borrowers, Lenders, Credit Card Companies”Here’s ONLY a quick extractNot too long ago the staff at Mortgage Blues warned about option arms. Now these home loans are beginning to worry borrowers and lenders. One real possibility is that borrowers are behind on their… — for brevity this is a summary … [...]

  2. [...] Nancy wrote a fantastic post today on “Option ARMs Worry Borrowers, Lenders, Credit Card Companies”Here’s ONLY a quick extractNot too long ago the staff at Mortgage Blues warned about option arms. Now these home loans are beginning to worry borrowers and lenders. One real possibility is that borrowers are behind on their… — for brevity this is a summary … [...]

  3. [...] Nancy wrote a fantastic post today on “Option ARMs Worry Borrowers, Lenders, Credit Card Companies”Here’s ONLY a quick extractNot too long ago the staff at Mortgage Blues warned about option arms. Now these home loans are beginning to worry borrowers and lenders. One real possibility is that borrowers are behind on their… — for brevity this is a summary … [...]

  4. [...] Michel wrote an interesting post today onHere’s a quick excerptNot too long ago the staff at Mortgage Blues warned about option arms. Now these home loans are beginning to worry borrowers and lenders. One real possibility is that borrowers are behind on their… — for brevity this is a summary … [...]

<
Jen's Problem SolversOur Partners Selected Articles

database Super-Search Need more? Search all databases



Timothy Blake and Jen provide the most detailed personal finance blog ever, covering major bank complaints, debt settlement scams, and the mortgage crisis. Use Super-Search to find anything, download from the document library and research 6-in-1 personal finance