ARM’s driving higher deliquency rates

With 17 increases in a row, the Fed has driven interest rates way up, and adjustable rate mortgages (ARM’s) have gone right along. The portion of adjustable rate mortgages that are at least 90 days past due has risen 141% in the last year according to Credit Suisse. Fixed rate mortgage delinquenecies have risen only 27% in that same period.

Overall mortgage delinquencies rates have risen to 2.32% in the second quarter of 2006, up from 2.06% in the last quarter of 2005.

If you are one of those people who find yourself unable to pay the new, higher mortgage payments required by higher interest rates, you should first talk to a mortgage broker to see if some sort of refinancing (to lower monthly payments) is possible or wise. If not then the best step may be to sell your house, unless your mortgage is higher than the possible sales price.

If neither of these options is possible I would recommend that you consider bankruptcy. At least talk to a good lawyer who specializes in that area.

A Chapter 13 bankruptcy will stop foreclosures and can reduce your monthly debt payments significantly. A Chapter Seven can actually wipe out your unsecured debts (like credit card debt) and allow you to stay in your house.

For more information on bankruptcy, click here.

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