Upside Down Mortgage

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The Subprime Solution

Question: ARM mortgages and the downturn?

We have the makings of one hell of a recession coming. I was wondering, alot of it was caused by subprime loans and ARM mortgages. What was the incentive for people to get an ARM when they would see higher interest rates later on? And what are some of the possible solutions for our troubles?

Answer: When Wellsfargo tried to sell me an ARM mortgage this was their selling points: Your minimum payment is equal only to the intrest the loan is racking up per month. If you pay your principal down you can use that as a credit line. The problem is that they neglect to tell you that if you only pay your minimum your balance will never go down. They also don't bother giving you scenarios of how much you will be paying if the intrest rate goes up a point. Instead, they showed me what would happen if it went down. Thank goodness I knew enough to get FHA financing. As for something to fix it, I don't really know other than finding some way for gov't subsidized flat rate mortgages to take over for those who have ARMs in need.

Munro 3-Subprime Solution

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