ARM Resets, It Only Gets Worse
By Kurt O'Keefe, Attorney at Law on Oct 19, 2007 in Benefits of Bankruptcy, Chapter 13 Bankruptcy, Michigan, Mortgages
The prime cause of the boom in foreclosures, Adjustable Rate Mortgage adjustments increasing payments beyond what the owners can afford, continues to worsen.
Current Bankruptcy law does not deal with this problem.
This is more fallout from the sub-prime crisis. When I say worse, the 50 billion dollars of resets this month is only half what the monthly total will hit next year.
41% of the ARM holders surveyed do not even know how their rates will adjust.
One of my current clients did not even know he had an adjustable until notified last June.
He trusted the mortgage broker, significant other of the realtor who sold him his residence. The closings were at their residence, no notary, no title person.
After getting the payment increase notice, he went to the county register of deeds, to discover his forged signature on several of the documents.
Unfortunately, this was on re-finananced mortgages, on a home that has declined in value. So, even if we sued and knocked out the forged mortgage, still could not get the amount of the initial mortgage as damages.
One idea mentioned in the post linked above, extend the teaser rates for 3 to 5 years. Then add the unpaid interest to the balance.
Ahh, our old friend, negative amortization.
Substituting a new problem for an old problem.
Let us try eliminating the exception currently in Chapter 13 for primary residences, and let people re-write the mortgage on their home to the current actual value, and a fixed interest rate.
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