New research released by the National Association for the Self-Employed last week found that approximately 3.8 million microbusiness owners hold an estimated 93% of so-called “toxic mortgages” that put them in immediate danger of foreclosure and homeless in the near future. Not only that, but mortgage brokers evidently deliberately targeted prime or near-prime microbusiness borrowers who (as they have often complained) lacked access to traditional small business financing products.

Experts predict a second wave of foreclosures when another set of “toxic” mortgages begins to reset, starting in the current quarter, and homeowners find their monthly payments shooting through the roof. In addition to the expected distress to households hit by this expected second wave of foreclosures, there is the small matter of the impact of all this on the labor market at a time when the country stands at the brink of what some analysts are predicting will be a long and difficult recession. If all the microbusinesses involved were forced to close their doors, approximately 1.3 million jobs could immediately be lost. Clearly, some sort of targeted relief is in order for all the small businesses embroiled in these exotic mortgages. Beyond that, policy makers need to craft a rational access to capital program for microbusinesses, so that their owners are never desperate enough to be vulnerable to this sort of toxic financing again.