Industry NewsMortgage

Study: Adjustable loan default fears won’t be realized

Losses will be spread out over next 4-5 years
Published on Feb 15, 2006

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by CareyBot

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 ju ...

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