With real estate numbers down, and adjustable rate mortgages moving higher we decided to go behind the subprime scare in this Face 2 Face. Let’s turn on the webcams and talk with someone who is affected, directly.
Webcam #1: Tony is from Texas. He and his wife have an ARM loan that was secured with subprime credit.
How did you get the loan?
We were looking online, Tony says. I knew I wasn’t going to get a great rate – but found a 7.9% ARM.
What are your payments?
They were right around $900, but now they’ve jumped to $1250, he explains. I’m also struggling with a serious illness and can’t make these payments. (Tony told us he is going to lose his house.)
Do you know others in similar situations?
I’ve heard there are many people in similar situation although I don’t know them personally. I want people to understand what an ARM is. I don’t think people don’t understand that the payment will increase after 2 – 5 years.
Jeff Macke reminds the panel it’s easy as financial professionals to talk about the subprime slime, but real people are getting hurt. “This is the human side of what’s happening.”
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Trader disclosure: On July 18th 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;Macke Owns (INTC), (JWN), (SWY); Najarian Is Short (LEH); Najarian Is Short (YHOO); Bolling Owns (XOM), (BP), Gold, Silver, Copper, Platinum, Corn; Bolling Is Short (FXI) And Owns (FXI) Puts; Finerman Owns (CX), Finerman's Firm And Finerman Own (C); Finerman's Firm Owns (BAC), (COP), S&P Puts, Russell 2000 Puts