I have read a few articles on the housing market. But the scenario for the most part ends up like the following example:
Homeowner has ARM, pays X amount, after ARM, payment is much higher, homeowner can not afford payment, Bank forecloses.
Well, my question is then why raise the ARM in a market where banks are loosing lots of money. I would think it is better for the banks to collect money at the rate before the variable increse than having no payments at all.
Could someone explain this?
Best,
Homeowner has ARM, pays X amount, after ARM, payment is much higher, homeowner can not afford payment, Bank forecloses.
Well, my question is then why raise the ARM in a market where banks are loosing lots of money. I would think it is better for the banks to collect money at the rate before the variable increse than having no payments at all.
Could someone explain this?
Best,