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U.S. "option" mortgages to explode, officials warn

WASHINGTON (Reuters) - The federal government and states are girding themselves for the next foreclosure crisis in the country's housing downturn: payment option adjustable rate mortgages that are beginning to reset.

"Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama's administration to discuss ways to combat mortgage scams.

"That's the next round of potential foreclosures in our country," he said.

Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These "underwater" mortgages have been a driving force behind rising defaults and mounting foreclosures.


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There have already been a number of failures or foreclosures in

those mortgages, primarily due to job or income losses, in advance of the resetting period. One recent german bank report concluded that, by sometime in 2011 I think, about half of U.S. mortgages would be upside down. I don't recall the report addressing troubles brewing in CRE either.
"An economy built on fiat money is a society on its way to ashes."

"An economy built on fiat money is a society on its way to ashes."

reedr3v's picture



This should be


"We can see with our eyes, hear with our ears and feel with our touch, but we understand with our hearts."

You're probably right quiltingsando,

You're probably right quiltingsado, these are very nasty mortgages and the way the economy has tank these people couldn't make the payments 9 months ago and most if not all are in worse financial shape now.

Thomas Jefferson once said, "The natural progress of things is for liberty to yield and government to gain ground."

Well, I guess he called that one.