The ARM Marketplace

According to the Mortgage Bankers Association, $1.5 trillion (that’s $1,500,000,000,000) worth of ARMs are set to recast this year alone – and even more are expected to recast in 2008!

Christopher L. Cagan, Ph.D., director of research and analytics for First American CoreLogic, estimates that 1,724,210 adjustable rate mortgages are scheduled for their first reset this year. Cagan explains that the first reset is critical, because that’s where the biggest jump in the interest rate occurs.

Millions of ARMs were sold with “teaser” rates.

Many home buyers who could afford these low introductory rates are going to find themselves scrambling to make their new house payments. Even those who can afford the new payments are likely to act to save money. Cagan predicts that 1.1 million of these loans will go into foreclosure over the next six years unless there is substantial “market remediation”—refinancing initiated by mortgage brokers like you.

Here’s just a few of the many comments on the Adjustable Rate Mortgage problem:

“Adjustable-rate mortgages exploded in popularity from 2003 through 2006. A slow-motion explosion of another kind will occur through 2012 as millions of homeowners find their ARM rates will reset for the first time. Rates will detonate, and monthly payments will blow sky-high”
Bankrate.com, May 29th, 2007

“As more ARMs adjust upward and housing prices begin to dip, many Americans like Britten can't refinance and are finding themselves trapped in too-high monthly payments.”
ABC News, June 19th, 2006

“Skyrocketing adjustable rate mortgages are one of the reasons that foreclosures have been on a steady increase.”
ConsumerAffairs.com February 14th, 2007

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