The Strib has an article about how “new figures show foreclosures in Hennepin County doubled during the first three months of this year compared to the same period last year.” This includes the city of Minneapolis as well as some of the wealthiest suburbs in the state. The story states that foreclosure rates are up across the state and that the problem is getting worse, not better.
The scariest part of the story for me was the note about how by some estimates subprime interest rates may rise as high as 12%. That will be a knockout blow for many borrowers, considering that the oldest of these loans are no more than three or four years, so the lion’s share of the monthly payment is interest. Tripling or quadrupling of your monthly payment is a nasty scenario, isn’t it?
The problem isn’t contained to the inner city… pretty much anyone could get a subprime mortgage, so the fallout in terms of declining home prices will affect a lot of people. Anyone who’s got an ARM needs to realize the gravity of their situation and figure out an escape plan soon.