Defaults Rise on Subprime Mortgages(November 30, 2005) -- The delinquency rate for subprime adjustable-rate loans rose to 6.23 percent between January and September, from 3.72 percent during the same period last year. Many of these borrowers opted for interest-only, low-documentation loans with interest rates that will adjust after two years, when some analysts predict a surge in delinquencies. Mark Agah, analyst at Portales Partners, says ARMs likely will hit $440 billion by the end of the year, up from $400 billion in 2004 and $220 billion in 2003. Some of these borrowers will find themselves in financial turmoil if home prices stall, preventing them from refinancing to extract cash or to make their monthly payments more manageable. Source: Wall Street Journal (11/30/05); Eisinger, Jesse
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