Foreclosures

Anxiety, Foreclosures Up as ARM Rates Rise

(April 3, 2006) -- As interest rates rise, thousands of Americans with adjustable rates mortgages are having trouble paying the mortgage.

Nearly 25 percent of mortgages – 10 million – carry adjustable interest rates, many of them with subpar credit ratings, according to the Mortgage Bankers Association.

Of the 7.7 million household that took out ARMS over the last two years to buy or refinance, up to 1 million could lose their homes through foreclosure over the next five years because they won’t be able to afford their mortgage payments and their homes will be worth less than they owe, according to First American Real Estate Solutions, a real estate data provider.

In West Virginia, Alabama, Michigan, Missouri and Tennessee, about one in five homeowners with high-interest, subprime ARMs was at least 30 days late at the end of last year, the Mortgage Bankers calculate.

Source: USA Today, Noelle Knox (04/03/2006)