Elephant in the Room
Have you heard about the 134 Billion in US option Arm mortgages getting ready to "recast" in the next couple of years? It's coming and it will have impact. Recasting is when, for example, a 5 year arm comes up for the interest rate to adjust to current levels. Many of these loans create negative amortization. Negative amortization makes your balance higher than it was when you originally took out your loan. If you have a five year ARM, it's possible home prices have declined and you are now under water with your value. Some interest rates will double causing many homeowners in this current economic environment to be unable to make these payments.
California, Florida, Nevada and Arizona, which have experienced declines of as much as 48% in values will be particularly hard hit when the ARMs begin adjusting. These states will see many additional foreclosures in their future.
Locally in the Mt. Hood area from Government Camp, Rhododendron and Welches, we will not see as much of an impact. Sandy, on the other hand, may see some additional foreclosures due to their rapid growth and newer subdivisions that have sprung up over the past five years.