The crest of the sub-prime re-sets is past, but, as they were shoveling money out the window, they lowered the standards.
So, the worse loans were written in 2006 and 2007, roughly coinciding with the peak in home values.
Now, interest rates are down, but re-financing is out for homes that are now underwater due to declining in value. Especially with those interest only, or negative amortization, loans on which no principal was paid.
Even with low rates, the ARM adjustments as the teaser rates expire will make the payment more than many can afford, especially those whose income has declined.
End result? Foreclosure crisis worsens.
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