Bloomberg reports on the continuing spiral of the ARM (Adjustable Rate Mortgages) market, as the much-maligned Subprime market reaches it’s apex of disaster and the problem begins to roll further up the line to prime borrowers who’ve also gotten ARM mortgages:

U.S. Mortgage Foreclosures Rise as Owners `Give Up’ || Bloomberg.com: Worldwide

Twenty percent of adjustable-rate subprime loans had late payments in the fourth quarter, a number that excludes the one of every eight mortgages already in foreclosure, the bankers group said in their report.The share of late payments for adjustable prime loans was 5.51 percent, from 3.39 percent a year earlier, and the foreclosure inventory rose to 2.59 percent, almost tripling from a year earlier.

What this all means is that there are more and more people getting behind on their mortgages in the prime market, indicating that in addition to all the current foreclosures, more may be on the way.  It is curious, then, that Bloomberg insists on throwing this factually questionable line out there:

Bloomberg.com: Worldwide

Forty-two percent of new foreclosures in the fourth quarter were people with adjustable-rate subprime mortgages, given to borrowers with limited or tainted credit records, according to the report. Those types of loans accounted for about 7 percent of all mortgages, the report said.

It would be more correct to say that ARM mortgages are available to everyone, but that riskier ventures (such as people with poor credit buying homes or people buying homes above their normal credit limit) have often recently been pushed into the ARM market.  The above statement does not make it at all clear whether they mean 42% of foreclosures were specifically subprime borrowers, or whether 4% of all mortgages are ARM mortgages.  Those are not two of a kind.  They can’t both be true, because clearly, we can see that it is not only subprime borrowers that have taken advantage of the ARM market.

As is typical of the type of reporting we’ve seen from the new sources of “the investor class,” there is an air about this article which says that the problem is greedy borrowers.  I know I bang on this drum a lot, but it bears mentioning that most of these mortgages went to lower and middle class, working class folks.  They went to people making, at most, $100,000 combined income, which really isn’t a lot, and they went to homes under $150,000, which is about $50,000 off the national average home price.  These people weren’t buying Monticello.

For folks in this income range, small increases in personal wealth have immediate impact on the welfare of their families.  In an era where our Republican president has been pushing the “Ownership Society” canard about as far as it will go; in a country where interest rates have been remarkably low for years; in an economy where the housing market is the only one growing, I think its fair to say that these people can be forgiven a bit for having tried to live up to the opportunity they were told they had.  I think they are owed a bit of respect.

But instead, George Bush, the Republicans, the “Investor Class,” the banks and the media all wipe their hands of the situation and say, “well, you lived outside your means.”  Huh!  I thought that in the vaunted Ownership Society, you were supposed to invest to increase your means?