If you hold an option ARM now, you will most likely head for some big trouble. MarketWatch has some suggestions:

• Be sure you understand what to expect from your adjustable-rate mortgage.
• Consider selling your home, if you can find a buyer, or refinancing. But be sure to evaluate the impact of a prepayment penalty. "Some prepayment penalties can be up to 5% of the loan amount or the amount of the principal balance," Mildenberg says. "I've seen clauses with six to 12 months of interest. If your interest payment is $300, you'd have to pay an extra $3,000." If home values have dropped and your loan balance has increased, your appraisal may be too low to refinance. Or, you could suffer a large loss if you sell.
• Expect at least three years before your loan recasts and an average interest rate of about 7%? At least make a monthly payment of interest only. This way, your loan balance shouldn't grow. If possible, pay even more toward principal.
• Consider asking your lender for a loan modification so that monthly payments are manageable. But try to obtain a commitment in advance that it won't be reported to the credit bureaus.
• Consult with a consumer-protection attorney. "We've found in some cases, disclosures given at the time of origination were not those required by law," Mildenberg says. "Or, due to heavy-handed salesmanship, loan brokers might have made inconsistent loan representations regarding the benefits or terms of the loan." Most consumer-protection attorneys, he says, offer a free consultation. If you have a case, you may be charged up to one-third of any benefit obtained through the lawsuit. Some state and federal consumer protection laws provide that the lender, if it loses, pay attorney fees. To find a consumer protection attorney in your area, visit www.naca.net.
• Avoid foreclosure. Even if you voluntarily surrender the house keys to your lender, your credit would be damaged enormously, Badal says.