The Real Deal Miami

Interest-only mortgages could trigger new defaults

June 12, 2009 02:31PM

The principal on interest-only mortgages — which let the borrower put off principal payments for years — is coming due now. That means the monthly payments for interest-only mortgage borrowers could jump 20 percent or more, which could mean a wave of defaults in this economy. Steven Kandarian, MetLife’s chief investment officer, told Bloomberg he thinks the worst is yet to come and that the defaults will occur over the next two or three years.