Mortgage Lowdown

It’s confirmed now — the bubble has burst and the housing bust is here to stay. Growing numbers of homeowners can’t make their payments. A little over a year ago, the housing sector was overheated and business couldn’t have been better. Contrast that with today when homeowners are struggling to make their monthly payments — we’ve definitely come a long way in one year. And homeowners who have taken Adjustable Rate Mortgages are the worst hit as rates finally rise and create havoc in their tightly stretched budgets. They are unable to make payments and are forced into the corner.

What follows with these homeowners is even worse — they are forced to sell their homes because they cannot afford it any longer but there are no buyers since almost everybody else is pretty much in the same boat. Msn.com reports:

People who have ARMs are "all of a sudden finding their budgets out of whack because their house payments went up 25% or 30%," according to a Pasadena bankruptcy attorney whose comment serves as the Journal story’s subtitle. According to Credit Suisse: "The portion of adjustable-rate mortgages that were at least 90 days past due has climbed 140% this year. And, according to a UBS study: About $137.5 billion face resets this year and about $524 billion face resets over the next four years."

Read more: Face it: The housing bust is here