Sharga said the recent increases reflect the “first wave” of defaults and foreclosures stemming from the rise in adjustable-rate mortgages whose interest rates are rising too fast for some borrowers to afford.
At the peak of the buying boom, he said, as many as 35 percent of borrowers nationally were signing up for ARMs. In San Diego the figure sometimes exceeded 70 percent, DataQuick has reported.
“California had a disproportionately high number of these mortgages,” he said. “What we don’t have a precedent for in the marketplace is that many of that type of mortgage, especially not all that adjust at the same time.”
This foreclosure story is really something to watch. It’s kind of like a category 3 hurricane sitting over very warm tropical waters gaining strength. We are just now getting the outer bands of the storm. By this time next year we will be bumping up against the eye wall. As pointed out in that last paragraph having this many exotic loans all resetting at the same time is totally unprecedented. I think I have noticed a higher number of people with fever blisters lately. Wonder why???
