the-commercial-investor.com

Remember in 2007 when we were told that the economy would collapse under the sheer amount of foreclosures that would occur when the Adjustable Rate Mortgage Tsunami hit in 2008. We all were holding our breath waiting for the “stuff” to hit the fan when everyone’s mortgage payment skyrocketed at rate adjustment time.

That was then … this is now … and we can all relax

Turns out that this darn Recession has driven interest rates so low that the ARM adjustments are going to result in LOWER payment.

John Mauldin wrote this in his latest post:

“The large majority of ARMs are linked to either 1-year LIBOR or 1-year Treasuries. We saw above that 1-year Treasuries are 0.39%, and 1-year LIBOR is 2.09. Both were at 4.5% in 2006. Those getting ready to reset in the near future are actually going to catch a break and see their payments go lower!

Fellow analyst Mish Shedlock writes that he has an interest-only mortgage tied to 1-month LIBOR, and his annual rate is going to drop to 1.75%.”

For those who are still in an ARM and current on payments, this should result in a signficant lowering of their monthly mortgage service payment and could potentially keep them in their homes. What influence this might have on the Federal Bailout and TARP are unclear … and …

Just thought you could use a bit of Good News! Happy Holidays.

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