According to an article in the Star-Telegram, experts are warning of an explosion of foreclosures that will rival the subprime foreclosure crisis.
The article said:
The mortgages in question are $230 billion of option adjustable-rate mortgages, creative lending products that flourished at the height of the housing boom. In an option ARM, a borrower can opt to pay less than his or her monthly balance due, and the difference is tacked onto the outstanding loan balance...Many experts had expected an explosion of defaults in the springtime on these roughly 564,000 outstanding mortgages.
These mortgage products were most popular between 2004 and 2007. Most of these loans are set to reset (making the balance due) within 5 years or after a certain amount of debt has accumulated on the loan. That would put the reset timeframe on these foreclosure vulnerable loans between 2009 and 2012.
And since these option-ARM mortgages are often used on very expensive homes, many homeowners with resetting mortgages may end up facing home values that are as much as 40 percent less than what they owe on the mortgage. If a homeowner is 40 percent under-water on his/her mortgage, he/she may not qualify for the foreclosure prevention plans currently available, giving them fewer foreclosure prevention options than those with subprime mortgages.
If you're facing foreclosure because of a option-ARM mortgage reset or for any other reason, please contact a Dallas-Fort Worth bankruptcy attorney to find out how bankruptcy can help you save your home from foreclosure.