Borrowers Struggle As Option Arms Are Resetting
This is what many have been warning about for awhile now. I was just talking about these types of loans to a realtor today. I said how I don’t think a lot of loan originators were trying to take advantage of borrowers with them because that would have meant they had to know what they were selling. The banks pushed these products and pushed many to sell them by making them very profitable for a loan originator.
Mark Zandi, chief economist at Moody’s, very well could be right. “The option ARM problem is just one of many for housing. “It’s more of a bump in the road,” Zandi says. “Many of these loans defaulted before they even got to higher payments. “I think the jobless situation is hurting more and the increase in interest rates. Add that with the coming ending of the home buyer tax credit and those are the bigger problems facing housing.”
I can sit here and speculate all I won’t but no one is really going to know until later on. My fingers are crossed.