The results indicate that self-employed business owners have Alt-A, Option ARMs, Interest-Only, Subprime mortgages. Estimates are that:

· 22.9 % (3,709,800* At-Risk) of all self-employed business owners used risky or “toxic” mortgages or refinancing that are scheduled to “Reset”.

· 19.2 % (3,110,400* At-Risk) of all self-employed business owners are at-risk of “payment shock”. They do not know the monthly mortgage payment that they will be required to pay at “Reset”.

· 18.4 % (2,980,800* At-Risk) of all self-employed business owners are very worried about the monthly mortgage payment due at “Reset”.

· 7.9 % (1,279,800* Immediate Risk of Default) of all self-employed business owners have already missed one to three or more monthly mortgage payments at this date before the expected resets in 2009 to 2012.

* Based on 16.2 million self-employed business owners per SBA Advocacy

Since the average number of employees for each self-employed business is 1-10 employees, this level of involvement in foreclosures and failure at reset may cause potentially millions to lose their jobs.

The NASE Survey sheds light on this mortgage foreclosure crisis. The survey highlights the fact that self-employed and micro-business owners bear the largest share of the “toxic” mortgages that are out there. These Alt-A, Option ARMs, Interest-Only mortgages will “reset” in 2009 and will result in the next wave of foreclosures.

It is suggested that loan modifications will help lower foreclosures. I agree, however, whereas loan mods will lower the monthly mortgage payments and may lower default, there is another concern. “Re-default” rates on modified loans are very high. In order to lower the rate of “re-default” we should include “immediate and specific financial guidance” to enhance the borrower’s ability to make the revised monthly payments.

The NASE survey Press Release was issue on November 21, 2008. Small Business is the “key” to the solution of this crisis. I have been researching Small Business Failure since year 2000 and concluded that the main cause of failure was the lack of understanding financial management. Individuals have the same problem.

The survey discloses that micro-businesses had the vast majority of these mortgages that are expected to “reset” and cause the next “tsunami” wave of foreclosures. The findings reveal an interesting fact that may offer a key to mitigating the losses on “toxic” mortgages that have plagued the banking community.

The Press Release and my Commentary appear on the NASE website http://www.nase.org

Thank you,

Samuel D. Bornstein
Professor of Accounting & Taxation
Kean University, School of Business, Union, NJ
Email: bornsteinsong@aol.com

thanks FHA.