Losses from the 7.7 million adjustable-rate mortgage loans made since 2004 will not have a significant effect on the economy as the loans adjust and payments go up, says a study released Tuesday. Defaults on ARMs could result in $110 billion in losses nationwide over the next five years, an enormous-sounding number that still comprises less than 1 percent of the home loans sold since 2004, according to Christopher Cagan, author of "Mortgage Payment Reset," a study by First American Real Estate Solutions. As adjustable-rate mortgages reach their adjustment date and payments jump, many have predicted problems if borrowers can't keep up with the higher payments. Economy.com, an independent research provider, says the overall delinquency rate for mortgage loans "is pretty much a straight upward path in delinquency between now and the end of 2007," according to Celia Chen, its director of housing economics. "It's unpleasant, but it will not break the economy or the real estate market," sai...
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