Bob Visini, vice president of marketing at Loan Performance, LLC in the Bay Area, and Will Carless talked about the impact of resetting ARMs. Will concluded that “some 50 percent of money borrowed through mortgages in the region will be wrapped up in reset interest-only or negative-amortization loans by 2010…if home prices rise reasonably over that period — and lots of people think they will — many of those borrowers will be absolutely fine.” But what happens to those borrowers if home prices keep falling? Even if home prices stay flat or rise, what will be the impact on our economy when “the holders of at least a quarter of all the borrowed money for housing suddenly lose several thousand dollars a month in disposable income?” Look at what happened when gas prices rose, and multiply that several times over.
A long question, but it gives the reporter the background for the question, and she can choose to just ask the last sentence.
