Who is mostly affected by mortgage payment shock?
Answer:It is considered that mortgage payment shock goes to subprime borrowers with double digit rate loans.
However, it is the ARMs that mainly caused the foreclosure wave. Foreclosures caused by upward adjustment of the rate and mortgage payment do cause a lot of mortgage payment shock.
Many people especially in high cost areas took nice ARMs to get into those great homes. However, many people lost their job, or simply they never expected their ARM payments to rise as much.
Even though the government is taking so many measures to offset the mortgage payment shock through streamline FHA refinancing, increasing temporarily FHA loan limits and tightening underwriting requirements, for some borrowers it will be too late to save their homes.
Lenders and brokers also have their responsibility and are paying dearly for often deliberately forcing borrowers into too expensive loans. Beside mortgage payment shock for borrowers, lenders experience lender shock at the losses they register with the high foreclosure level.
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