Another wave of foreclosures is projected for the summer of 2008 into the summer of 2009. The staggering is correlated to adjustable rate mortgages, loans that begin at one rate and after a period of time (usually 2-5 years) change rates - often to a much-higher rate that compensates the lender for low earnings during the honeymoon period. A couple more of those milestone will occur in the next 18 months.

Emerging from bankruptcy three years ago, Marcus Neal seemed an unlikely candidate for a home loan. But that didn't stop his lender.

With no money down, Neal was able to buy his first home, a cozy two-bedroom townhouse in La Vergne, for $89,000 just six months after walking out of U.S. Bankruptcy Court. Neal, 37, said he didn't realize he'd been saddled with a high-interest-rate loan that would adjust in two years.
Advertisement

"I didn't know what an adjustable-rate mortgage was," he said. "I figured I was doing a good thing. I wish I had been more educated." –from Tennessean.com

Why don't people know what they're getting into?

• Don't ask questions
• The loan is represented as the best thing for them and they believe that
• They don't know what questions they should ask
• The nasty little details are left for the fine print
• They don't ask which questions they should be asking

Do you feel torn between blaming the stupidity of borrowers and the greed of loan writers?

I recommend doing what it takes to live within your means. Cut back, if necessary. Pay your bills, including your mortgage. In fact, people would have lots more money for investments and wealth building if they realized they could pay off their existing mortgage in a third the time by simply using some financial principles that are little understood. That's why I consistently recommend reading Let Your Mortgage Make You Rich!