Adjustable Rate Mortgages, taken out largely by aggressive or “subprime” borrowers during the hot market, are adjusting their rates higher, leaving many homeowners stuck with significantly higher payments.
Billions of dollars worth of “subprime” ARMs will be subject to higher payments. In fact, according to CNN, more than two million subprime adjustable rate mortgages (ARMs) are poised to reset at much higher rates in coming months, dumping even more houses on an already over loaded market.
Homeowners who took low “teaser” rates for the first two or three years of the loan may see their monthly mortgage payments go up by 35% or more in some cases.
Consumer groups, politicians, even President George Bush are worried that hundreds of thousands of subprime ARM borrowers will be unable to make their increasing payments and will lose their homes.
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