Here's a summary from an article in the Baltimore Sun (03/20/06); by James R. Hagerty, as reported in the Mortgage Bankers Association email daily... I can't believe that 1 in 8 mortgages taken out by aggressive financing (100%, no money down, etc.) over the past 2 years will result in foreclosure. But I have no doubt, that after price dips over the next 3 years, it will take another real estate [decade] cycle for these folks to see the value of their home approach the mortgage if it is indeed a 95% or 100% mortgage. Sales are cooling, let's see if recent homebuyers panic when they realize (ok, if they did a 100% mortgage they will probably never realize it) their home is not a credit card or an investment. Also, will be important to see if the lenders panic triggering forclosures rather than workouts. I assume most of these loans have PMI insurance to make up for the low downpayment. With utility costs up, hopefully rates will rise slowly so folks don't get behind - I think each lender should send notices with estimates that rates could rise-- be prepared.

From the Baltimore Sun...
"According to Economy.com, interest rates on 25 percent of outstanding mortgages will adjust upward in 2006 and 2007. Though some homeowners will be able to avoid payment shock by refinancing, First American Real Estate Solutions expects one in eight adjustable-rate borrowers to default on loans originated in 2004 and 2005. The company's research and analytics director, Christopher Cagan, believes the most vulnerable borrowers are recent buyers who have not seen rapid price appreciation boost their home values above the mortgage balance, adding that price gains already have weakened in several markets. However, Mortgage Bankers Association chief economist Doug Duncan does not expect a substantial jump in foreclosures tied to rate resets, as he contends that foreclosures are primarily the result of job losses. "