One of the ugliest consequences of the last housing boom has been the rise of risky loans known as option ARMs. The adjustable-rate mortgages let borrowers make smaller monthly payments than they actually owe, with the shortfall getting tacked onto the balance. In recent years that feature has allowed many people to buy more house than they could otherwise afford. Once the balance hits a certain level, the loan resets with higher payments—often, so high that borrowers end up in deep financial trouble.
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