An explosion of foreclosures will result from option ARMs set to reset to higher payments.

(Source: CNN)

Option-ARMs: File under, “It sounded good at the time.”

These exotic mortgages allowed homebuyers to come to closing with little cash and choose, monthly, how much to pay: interest and principal, interest only, or a minimum amount less than the interest due.

Of course, the last option is the one 93% of option-ARM buyers selected, according to a new report released this week by Standard & Poors.

But eventually, everyone has to pay the piper.

Read Les Christie’s full article “Option ARMs: Housing recovery killer?” in CNN Money (November 25, 2009).

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