http://www.housingmarketnews.net/images/resets.jpg
"Investopedia explains Option Adjustable-Rate Mortgage - Option ARM
"Since many option ARMs offer a low teaser rate, many mortgagors unknowingly refinance their present mortgage in hopes of making lower payments. Unfortunately, once these short-term teaser rates expire, the rates of interest are returned back to those similar to conventional mortgages.
Furthermore, for those unlucky mortgagors that elected to make minimum payments, they will find that the principal owed on their mortgage has actually increased. This is because the value of minimum payments did not entirely cover the mortgage's interest. The uncovered interest would then be added to the mortgage's principal."
http://www.investopedia.com/terms/o/option_ARM.asp
It's gonna be ugly.
The way the US Gov is going, they will probably offer another massive bailout of these defaulters, putting us deeper in debt and making them beholden to the Gov. If we haven't imploded by then.
Bawney Fwank is going to introduce "Rent to Own" legislation for defaulters.
Since Obama owns the mortgage industry through Fannie and Freddie, he can set the terms.
Home ownership is going to become a right of citizenship.
Courts are already voiding mortgage contracts.
yitbos