During a meeting about mortgage fraud held Thursday in Washington, D.C., two state attorneys general warned federal officials about the possible ramifications of looming resets for pay-option adjustable-rate mortgages (ARMs).
‘Payment-option ARMs are about to explode,’ Iowa Attorney General Tom Miller said, according to a Reuters report.
Miller's sentiments were shared by Arizona's attorney general, Terry Goddard. In July, Goddard and six other attorneys general wrote to Treasury Secretary Tim Geithner and Department of Housing and Urban Development Secretary Shaun Donovan, recommending improvements to the Obama administration's foreclosure prevention initiatives.
In the letter, Goddard said the "need for immediate change in the loan modification process is particularly acute at this time because a very large number of payment-option ARMs in Arizona is scheduled to reset in the near future."
Goddard told Reuters after the meeting that 128,000 pay-option ARMs will reset in Arizona over the next year.