The NYT had an article talking about the round of option adjustable rate mortgages (option ARMs) that will be resetting over the next few years. The headline of the article is: "adjustable mortgages loom as threat to housing recovery." This is not supported by the evidence presented in the article.
The article cites estimates produced by FirstAmerican Core Logic, that 600,000 option ARMs will reset over the next four years. This is a rate of 150,000 a year. Even if all these mortgages defaulted and went into foreclosure, it would increase the rate of foreclosures by about 6 percent. Realistically, it is unlikely that more than half of these mortgages will end up in foreclosure. While this is not trivial, it is not large enough to qualitatively change outcomes in the housing market.
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