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Americans Will Lose Homes at Record Pace as ARMs Readjust
Lyndo LaRouche
before the reset. These subprime borrowers face an average increase of 25%, or $400/month, in their monthly payments. Since they missed a payment, they are not eligible for President Bush's very limited plan, which Lyndon LaRouche has called "the most stupid" of all the supposed "rescue" plans. Furthermore, the prices of homes are falling, which means most borrowers do not have the 3% equity to qualify for the Federal Home Administration (FHA) bailout program, called FHASecure. These subprime borrowers are "upside down," since they owe more than their home is now worth. These borrowers will walk away from their homes in record numbers, according to David Olson, President of Whole Access Mortgage in Columbia, Md., because they also cannot sell their homes, since home prices fell by a record 3.2% in the 2nd Quarter, and a huge unsold inventory exists.
The number of subprime Adjustable Rate Mortgages (ARMs) rose to 72.5%, or $1.26 trillion, of all ARMs outstanding in the lst Quarter--a 17-fold increase over 2001. About 57% of mortgage broker customers with ARMs were unable to refinance a new loan in August.
According to Bloomberg.com, falling home prices, a rising inventory of unsold homes, and requirements of no missed payments, make it impossible to sell or refinance without losing money, and there is no government help coming under present programs because most of the borrowers in trouble do not qualify.
The only solution is Congressional action to stop all foreclosures immediately, as American stateman Lyndon LaRouche's Homeowner and Bank Protection Act of 2007 mandates.