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A new study predicts that between 2 and 3 million small business jobs in California will disappear over the next 3 to 4 years. The reason? Risky home mortgages. Thought toxic home loans (and securities based on them) only caused the meltdown of financial markets? Unfortunately, due to the number of small business owners who took out mortgages to finance their businesses, those risky home loans may kill many small business jobs as well.
Prof. Samuel D. Bornstein and Jung I. Song of Bornstein & Song, CPAs & Consultants conducted a California Small Business Toxic Mortgage Survey using members of Merchant Circle, an organization including 750,000 small business owners. The survey measured how many California small business owners took out risky mortgages to finance their business (including Adjustable Rate Mortgages (ARMs), interest only and subprime mortgages, amongst others).
The survey explored how many small business owners are at risk of "payment shock" when their mortgage resets. As too many people have discovered, adjustable rate mortgages often balloon after an affordable introductory period, getting reset to higher interest rates. "Payment shock" refers to a dramatic increase in monthly payments due after the reset.
The results of the survey are frightening:
Based on the survey results, the study estimates between 2.1 million and 3.27 million jobs losses from the one million California small business owners at risk of mortgage payment shock over the next few years.
With toxic mortgages directly impacting many small business' ability to survive in addition to the roofs over people's heads, effectively dealing with mortgage problems is vital.
Here are some tips for seeking a mortgage modification.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.