| In 2004, the popularity of adjustable-rate | | | | interest. In other words, if a borrower to make |
| mortgages, also known as ARM has been | | | | payments to catch up, their mortgage would be |
| shocking. Arms were 1.5 and 1.7 in the range of | | | | really important to increase. Homeowner would |
| 4%, so that the lure of the teaser-rate | | | | actually lose equity, these loans with negative |
| mortgages was not so shocking. 2005, interest | | | | amortization. |
| rates were to rise to begin with, but ARM 1.5 has | | | | 2006, $ 400 billion of mortgage loans were |
| remained low in the range of 5% for home | | | | planned for the remaining period, the rate was |
| purchase and refinancing rates. Mortgage brokers | | | | fixedcame to these borrowers. In 2007, another |
| and interviews always seemed to me the same | | | | $ 2,000,000,000,000 reset and then the crash. |
| question – How long can these low rates last? | | | | With the price increase for the year 2007, many |
| In the mortgage industry, 20052006 and 2007 | | | | borrowers could not afford the high interest rates. |
| would remain for the huge increase in pay option | | | | Mortgage companies like New Century began to |
| ARM in memory. These are the last teaser rate | | | | leave the business and property values started to |
| loans that start at 1%, but much of the deferred | | | | fall sharply. |