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Option ARMS

Posted by CM on August 26, 2009

I came across this story today on the NY Times site: Adjustable Mortgages Loom as Threat to Housing Recovery

Option ARMS gave borrowers 4 payment options: less than the interest, which increases the balance every month; just the interest; the equivalent of a 30 year fixed rate mortgage; and the equivalent of a 15 year fixed.” 

The article talks about Mr. Clavon whose monthly mortgage payments have increased from $2,200 to $2,700 and will rise to $4,000 in two years.  Now option ARMS are defaulting and foreclosing at high rates.  Mr. Dzurinko had an option ARM that started at $900/month and rose to $1,400/month.  Luckily he was able to get his loan modified to $800/month with the help of a lawyer at Legal Services of Northern California.  So there is help out there!

Source:   Adjustable Mortgages Loom as Threat to Housing Recovery.  By John Leland for The New York Times.  8/26/09.


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