The next wave of foreclosures will be the ARM's and Option ARM's . originally it was thought that the Option ARMs would not be resetting until 2011 , but most of them carried a proviso that when the balance owed hit 125% of the original mortgage , they reset .Option ARMs were about the most ridiculous of all of the ridiculous exotic mortgages . They basically allowed the borrower to pay whatever amount he wanted to , including amounts less than the monthly interest . As a result , most of these mortgages have been amortizing negatively and many are near the magic 125% number . These resets and the resulting foreclosures could set off another , more drastic round of financial meltdowns . Since our government has already wasted a huge amount of its financial ammunition on a variety of idiotic boondoggles labelled rescues and stimulus , it will be very interesting to see how this plays out .

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Nearly five years ago, when I bought my acreage, the lender and I talked about my plans and how the next few years would look. The mortgage was set up to go to an ARM this coming spring for reasons that made a lot of sense then.

So now I'm retired on a fixed income (with withdrawals from my 401K) that covers my expenses. I have a lot of concern about how high the interest rate will jump. The balance still owing is nearly 3X my current annual income and I still have the house I live in to make payments on. What banker in their right mind isn't going to go for squeezing the last drop of blood out of a turnip by switching my rate from less than 6% to something closer to 10%, just because the laws say they can?

I have had no problem qualifying for a new mortgage. The problem that I ran into was that my house was devalued greatly, and the lender wanted me to go underwater to refinance. I told him, very gently, to bit me and stayed the same. I'll ride this out.

Lolly , that scenario is going to be repeated a couple of million times and the answer for many , maybe even most of the borrowers is going to be to walk away and let the bank ,or whoever holds the mortgage now , foreclose on the property. This is going to be like kicking a guy when he is down for the economy .

We've talked about the game plan for my situation. Even though I have more than 50% equity in my house I will walk away from it if needed, in order to keep the acreage where I have 30% equity.

Of course, there is a slight possibility is that things will go well. My farm mortgage is not with a for profit bank, but rather a credit union type of financial institution. In nearly five years I've never had a late payment. I've had the house over 12 years and never had a late payment. My fingers are crossed and we're still looking at options.

I just don't want to have to liquidate my 401K because my income to expenses ratio is upside down from where it used to be. That money was supposed to sit there and send me a small dividend check every month so I wasn't taking a job from someone who really needs the income.

If you have 50 % plus equity in your home , it seems that you should be able to sell it for at least a small profit and get out from under that mortgage . Generally , it only makes sense to walk away if you can't sell the property for at least enough to pay off the existing mortgage .

This town has seen 20,000 auto worker loose their jobs over the last ten years. Yes, I have enough value in the house that common sense says I should be able to sell for enough to pay it off. Reality says that 3 houses out of 10 are for sale in this area, and many have been on the market for a long time.

If my interest on the farm note goes up by 40% (5.9% ~~ 8.3% = $330 to $490 monthly) I won't be making both mortgage payments comfortably. If I must walk away from something, it would be the house in town.

My mortgage is paid off , but the property taxes that I still have to pay on my house are just about three times the mortgage on your farm . Wonderful Long Island , land of taxes .We also have a very high state income tax , an 8 1/4 % sales tax , and extortionary tolls on every bridge and tunnel in the area .

From reading your post Lolly, I've done a bit of looking around to see if I could find something that might help you. This is my first stop.
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It may or may not help you. I will continue looking.