A lot of “ARM’s”  are set to start adjusting towards the end of this year.  Will we see a lot more foreclosures? Here are a few problems that ARM owners have:

For some people, their mortgage payments are about to adjust upwards into a territory they can’t afford.

They will want to refinance and in doing so, with mortgage guidelines having tightened and changed, they may not be able to qualify. (100% financing is almost non-existant now and 95% LTV is very difficult). Also, if they refinance and their value is down below what their loan balance is, do they have the money to make up the difference?

Also, if their value is down in the range of the mortgage value and they feel they have to sell, do they have the money to pay the fees to sell the home and/or make up any shortage in value to pay off the mortgage.

ARMs Fuel Foreclosures was a good read dealing with how lenders and owners may hope to deal with some of these issues.