Released: May 01, 2008

Fed’s rate cut could help ARM holders

Source: Stephanie Armour & Sandra Block, USA Today

The Federal Reserve’s action on Wednesday was the latest in an interest-rate-cutting drive over eight months that’s helped lower the yields that many adjustable-rate mortgages are tied to.

Thanks to the Fed’s cuts, the rates to which those ARMs have been resetting have sometimes saved homeowners hundreds of dollars a month. For some struggling mortgage holders, the lower rates have helped stave off delinquencies or foreclosures.

“This could be the difference between a person being current (on a mortgage) or delinquent,” says Orawin Velz, senior research director at the Mortgage Bankers Association. “The risk of foreclosures due to resets has declined.”

Read Full Article: Fed’s rate cut could help ARM holders