sub-prime market
ARMageddon Looms… Will You Be Ready?
July 9, 2007 by Tucson Realtor - Michael Krotchie · 5 Comments
This topic has been on my mind the past several months. When the housing market exploded a few years ago and homebuyers squeezed into homes with [tag]Adjustable Rate Mortgages[/tag] ([tag]ARMs[/tag]) with seductive initial interest rates, I said to myself, “In 2 or 3 years when those ARMs come due, there are going to be a lot of unhappy people.”
The recent follies in the [tag]sub-prime mortgage[/tag] market were an omen of trouble on the horizon and in a few more months that trouble will burst onto the mortgage scene with reckless abandon. According to this latest article from CNN.com more than 600,000 homeowners will be affected by the resetting mortgage rates.
“Delinquency rates will probably peak by the end of the year,” said Doug Duncan, chief economist for the Mortgage Bankers Association (MBA), “and foreclosures in 2008.”
Lenders approved many borrowers who had little chance of being able to afford the payments two and three years out. They approved applications without any proof of income or assets (”liar loans”) and others that barely could make the low teaser-rate payments. Some borrowers chose interest-only ARMs, which left the principal of the loan untouched.
I've lived in the Old Pueblo for more than a decade and have an intimate knowledge of Tucson as well as the surrounding areas. I go hiking and traveling whenever I have a break from real estate (which isn't often enough!) and enjoy taking in an Arizona sunset while relaxing in my backyard. 
