Additionally, lawmakers in Washington, D.C. are at work on several plans that would deliver foreclosure relief to distressed borrowers.
All of these foreclosure prevention efforts may not be able to stand up to the tsunami of foreclosures on the way. Sharga says that a record number of hybrid adjustable rate mortgages (ARMs) – worth $362 billion – will reset in 2008.
These so-called “exploding ARMs” usually have low introductory interest rates that reset much higher after two or three years, and then re-adjust as often as every six months after that. Unless these loans can be reworked, many will fail.
“We expect to see another foreclosure peak in the late third or fourth quarter of the year,” said Sharga, “because of the record number of resets coming.”
