By RANDALL W. FORSYTH
http://online.barrons.com/article/SB122882017811791223.html?mod=b_hps_9_0001_b_online_exclusives_weekday_r1 WHO ARE THE HOMEOWNERS most likely to get in trouble with funky mortgages, such as alt-A, option ARMs and interest-only loans?
The popular perception is these were folks who borrowed neither wisely or well, extracting cash from their houses to go on spending sprees, to redecorate the house or buy a boat or pay off credit card balances run up on big-screen TVs or vacations. Or they tapped the money from their house to buy a vacation condo, or two or three to flip.
Not subprime mortgages, mind you, which were mainly pushed on the least-affluent and most vulnerable borrowers. No, these are mortgages that were given to reasonably substantial borrowers who wanted loans with few questions asked, especially pesky ones about income.
Owners of small businesses, for instance.
A surprisingly large proportion of self-employed entrepreneurs used risky mortgages either to start or to expand their businesses, according to a recent study by the National Association for the Self-Employed. And millions of them face sharp increase in their loan payments -- just as the economy tumbles into a freefall.
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