Double bind of increasing debt and falling equity
In effect, the minimum payment option means that the scale of the homeowner's debt is increasing each month (which becomes a double bind when house prices start to fall).
Immediately related elementsHow this works
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The Global Financial Crisis »The Global Financial Crisis
Potential consequences of the financial crisis? »Potential consequences of the financial crisis?
More financial institutions will collapse »More financial institutions will collapse
Financial institutions will suffer further capital losses »Financial institutions will suffer further capital losses
Financial institutions forced to write off bad debts »Financial institutions forced to write off bad debts
Many homeowners will default on mortgage and loans »Many homeowners will default on mortgage and loans
Wave of option adjustable rate mortgage deafults to come »Wave of option adjustable rate mortgage deafults to come
Big monthly payment increases when Option ARMs reset »Big monthly payment increases when Option ARMs reset
Double bind of increasing debt and falling equity
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