Are Adjustable Rate Mortgages to blame for the Mortgage Mess

Discuss Adjustable Rate Mortgage (ARM)

Are Adjustable Rate Mortgages to blame for the Mortgage Mess

Postby Alex Chris » Fri Sep 03, 2010 11:47 am

It seems that the people that purchased their homes with Adjustable Rate Mortgages got into big trouble when their rates adjusted at a higher rate. Did they not see this coming since they did opt for a Adjustable Rate Mortgages vs a Fixed Rate Mortgage.

Also do people with Fixed Rate Mortgages having the same problem as Adjustable Rate Mortgages home owners? I would assume not, usless they lost their job.
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Re: Are Adjustable Rate Mortgages to blame for the Mortgage

Postby kindred » Thu Jan 27, 2011 1:25 pm

These adjustable-rate mortgages significantly fueled the housing crisis that seems to show no signs of ending. During the mortgage lending boom from 2005-2007, lenders offered subprime borrowers with these mortgages having low initial or teaser rates followed by a huge increases in the borrowers' monthly payments a few years into the loan. These borrowers were not able to endure the variable adjustments eventually causing them to default.
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