Incoming Maturity of ARMs Signals Another Wave of Foreclosures

Posted on December 11th, 2008 in Foreclosure Crisis

Adjustable Rate Mortgages (ARMs) are time bombs threatening to explode in the already devastated economy. By mid-2009, a new wave of ARMs will reset.

ARMs initially offer affordable monthly payments. What the borrowers do not know is that deferring their mortgages would only cause their debt to pile up. Then, when the time is up, or the mortgage matures, interest increases making payment more difficult. When the borrower can not pay anymore, foreclosure comes in.

Economist Elliot Eisenberg and the National Association of Home Builders (NAHB) believe that the whole housing industry must be fixed first to help our economy recover. They consider foreclosure as the root of the economic downfall.

With that being said, ARMs must be targeted too since this home loan product usually ends up to foreclosure.

Furthermore, Eisenberg warns home builders that 2009 is not yet the fresh start for housing with the upcoming reset of ARMs. Home builders cost cut through reducing their inventory and letting go of some employees.

Eisenberg does not mean to scare the builders, businessmen, lenders, borrowers and the government. He just wants to educate. If your ARM is about to reset, he suggests to:
Do something now! Talk to your lender and fix it together.
If that does not work, find local lenders that are willing to help you save your home from foreclosure.

Eisenberg reiterates: If the housing industry does not recover, more jobs will be lost, businesses will fail, homes will devaluate, and tax revenues will also decline forcing the government to save up by cutting off areas like social services and public safety.

This constant flooding of foreclosures brought nothing good to our economy. Let us be reminded that giving attention to the foreclosure problem is a great leap in solving the economic depression.

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