Mortgage companies got drunk and now they will pay.

Some facts about the mortgage market from the Wall Street Journal:

• About 80% of subprime mortgages today are adjustable-rate mortgages, or ARMs, that have been nicknamed “exploding ARMs” because they have low fixed-interest payments in their first few years but then usually adjust to higher interest payments.

As the interest rates go up, so do foreclosures. See my other blog posts, or read my articles on to find out what you can do if you are in this situation.

• Creative [and risky!] new subprime loans — “piggyback,” “interest-only,” and “no-doc” loans, among others — accounted for 47% of total loans issued last year. At the start of the decade, they were less than 2% of total mortgage loans.

• Borrowers have never been more leveraged. Loan-to-value ratios, the loan amount expressed as a percent of the property value, have grown to 86.5% last year from 78% in 2000.

This situation is not stable. If we go into another recession this market will explode.

To repeat, if you are in a situation where you cannot meet the payments on your mortgage. there are things you can do that may save your house. See our other BLOG entries and our section on bankruptcy.

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