It’s panic time for U.S. legislators, regulators, banks and lenders. More than $24 billion worth of adjustable-rate mortgages (ARMs) are expected to “re-set” to higher interest rates in November – boosting the likelihood of further home foreclosures.
Sky-high default rates om mortgages are not confined to subprime-related borrowing, and the US economy has yet to feel the full force of the housing crisis, according to a report in the The Wall Street Journal.
According to the WSJ, there is a “rapid rise” in default rates on ARM mortgages, mortgages that give borrowers with good credit several different monthly-payment options, reports. And a report by Citigroup says losses on ARMs may be “close to subprime” in some cases.
Late credit card payments and outright defaults have soared in recent weeks. The most recent data says that “dead” balances written-off as uncollectible by banks have jumped 24% from a year ago. Late payments are up 16%. Can this be linked to the subprime mortgage meltdown? Our research says it is.