Subprime Nightmare to Get Worse

With rates about to reset higher, expect more foreclosures
By Rob Quinn,  Newser Staff
Posted Nov 24, 2007 2:28 PM CST
The rise in foreclosures is expected to alter the whole chain of housing supply and spell ruin for many.   (KRT Photos)
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(Newser) – The subprime mortgage crisis is only just beginning, new data suggests. Hundreds of billions of dollars in subprime adjustable-rate mortgages are due to reset to higher rates in the year ahead, reports the Wall Street Journal. Analysts say this means the steep rise in defaults and foreclosures this year may be just the crest of a wave. 

Lenders could see a rise in people unable to make payments on the higher rates. One option pushed by the FDIC is to freeze 2 million mortgages before the new rates kick in, though the mortgage industry is opposed. The crisis is putting pressure on presidential candidates to find ways to help floundering homeowners. When rates reset, the typical monthly payment of a subprime borrower could rise about $350, the Journal notes.