ARMs

Very nice little article over at Truthout that goes through the steps of the mortgage crisis. Ash goes through the steps that led to the unsigned for increase in the ARMs which led to the foreclosures.

Truthout: Roll Back the Interest Rates

What happened next is that the market got ahead of itself, a lot of loans were written very quickly. That left the lenders short of cash. In an attempt to replenish cash supplies the lenders raised the rates on the adjusting ARMs as much as they possibly could. They did so on a wide scale, nationally, and with absolute disregard for the consequences.

Homeowners were saddled overnight with payments dramatically higher that they signed up for and the seeds of a financial crisis were planted.