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.