Tales of mortgage woe are often boring and complicated, but the New York Times’ John Leland has a good story today about how option ARMs have replaced subprime as the housing industry bogeyman.
Between 2004 and 2007, $750 billion in adjustable-rate mortgages — with very low payments that reset to very high payments in a few years — were taken out by homeowners, many of whom figured they’d sell or refinance when the rates reset thanks to continually increasing home values (oops). Foreclosures are up, and some analysts see the loans as a threat to a recovery.
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