Approximately 600,000 ARMS are set to well, reset next month. This prompts a coalition of groups to call for a moratorium on ARMS. A two year moratorium. WKYC's website has an article about it here.
Cleveland's Slavic Village and Union-Miles neighborhoods are in the unfortunate position to be number one in the Country in foreclosures...yes, that is the Country and not the County! So Slavic Village was the setting for this moratorium request. They call it the Save The American Dream program. There were people there from other cities like Des Moines and Pittsburgh.....places also hoping to stem the tide of foreclosures.
They give the example of someone with an $800/month mortgage finding themselves owing $1200/month or $1400/month. I have this nagging question: If you are going to get an ARM mortgage, do you not ask first what the monthly payment might be if the interest rates are 1,2 or 3 % higher than the beginning interest rate? I know I would. Is it that this information doesn't come up? Or that it doesn't make a difference to the purchaser? Do they have salaries documented that will cover the $1400/month down the road?
I would love to have the mortgage Rainers give their professional opinions about a moratorium. I think an open debate could truly help the consumers who read our blogs. I know it might help me make up my mind.
Some of the groups involved in this call to No ARMS: Empowering and Strengthening Ohio's People, The National Training and Information Center in Chicago, and of course, Save The American Dream on their word press blog. Heck, even the Cleveland Catholic Diosese is on board. What say you, Mortgage Lenders and everyone else?
Does it give people a chance to reform their spending habits: improve credit scores, make payments on time and be able to refi in 12 months? I guess that is my real question.
Peace Out - 3C