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
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Potential consequences of the financial crisis? »Potential consequences of the financial crisis?
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More financial institutions will collapse »More financial institutions will collapse
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Financial institutions will suffer further capital losses »Financial institutions will suffer further capital losses
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Financial institutions forced to write off bad debts »Financial institutions forced to write off bad debts
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Many homeowners will default on mortgage and loans »Many homeowners will default on mortgage and loans
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Wave of option adjustable rate mortgage deafults to come »Wave of option adjustable rate mortgage deafults to come
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Big monthly payment increases when Option ARMs reset »Big monthly payment increases when Option ARMs reset
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Double bind of increasing debt and falling equity
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